Better Homes and Gardens Rand Realty - The Market is Changing are you Changing With It?

The Market is Changing... Special Report:

Special Report: How the Market is Changing, How Those Changes Will Impact Our Business, and What Can We Do to Adapt and Thrive

Joseph W. RandBetter Homes and Gardens Real Estate – Rand Realty

March 2013

The market is changing. We’re seeing it throughout the country, and particularly in our region. Inventory is tightening. Prices are stabilizing. Buyers are losing homes to bidding wars. Essentially, we have come to the end of a market cycle that began in about 1997, and starting a new cycle that will drive sales and prices up for most of the next decade.

This is all good news, of course, for those of us in the real estate industry. Having lived through the last market change, which was the transition from the bull market of 2001-2006 to the correction that started in 2007 and then accelerated after the financial crisis of 2008, we certainly welcome a market in which sales and prices are going up instead of down.

But change can still be intimidating. And even though this market change is generally good news, it does bring with it new challenges that we will have to face and overcome if we want our businesses to thrive.

That’s why Better Homes and Gardens Rand Realty has put out this Special Report on how the market is changing, and what you can do to change with it. The Report derives from a series of seminars that we held at Better Homes and Gardens Rand Realty from November 2012 through February 2013, and comes in two parts:

The Market is Changing…This Part of the Report comes out the seminar series that we held in November 2012, where we discussed the coming changes to the real estate market, how they would impact our business, and what we could do to adapt and thrive in the new environment. This part of the Report derives from those discussions, and includes not only an expanded version of my notes for those presentations, but many of the ideas that came out of the open forum we had with over 500 Rand agents.

…Are You Changing With It?On the “flip side” of this book, you can find the other half of this Report, which comes out of the forum series we held in January and February 2013 entitled “Extreme Makeover: Real Estate Agent Edition.” There, we discuss how you can implement change in your own business, making over your productivity, technology, and systems to put yourself in a position to take advantage of the opportunities presented by this market change. You can find this part of the Report just by flipping the book over.

We believe that forewarned is forearmed, and the more we do now to start preparing for the market changes that will start impacting our business in the next few years, the better-positioned we will be to take advantage of all the opportunities the new market will be giving us. The “Market is Changing” and “Extreme Makeover” seminars were just the first step, and this Report just is the second of what will be a long process of revitalization, reinvention, and reenergizing.

Our best wishes to all of you for your continued success in the new market.

Introduction:The Market is Changing...

The Market Is Changing Overview

The November 2012 “Market is Changing” seminars were not the first time that we held agent forums to deal with market change. Back in November 2005, on the cusp of the last major shift in the market – from the seller’s market that thrived during the early part of the decade, to the buyer’s market that we have all endured for the past seven years – we held a similar series of identically-entitled events to discuss what we believed would be the coming changes in the market.

In those forums, we came up with a host of ideas that we could implement to help us adapt to an environment with declining units, falling sales prices, and ultimately lower revenues for the company and the agents. Indeed, those ideas ultimately resulted

in whole series of company initiatives that helped us cope with the new market realities:

Partly as a result of our proactive preparation for the market changes that we started to experience in 2006, Better Homes and Gardens Rand Realty was able to manage the disruptive effects of those changes over the next seven years. Even with the decline in revenues that came from the fall in units combined with depreciating sales prices, which drove many of our competitors out of the business, we were able to continue to grow the company with an innovative and aggressive spirit.

How the Market Was Changing, 2005 What We Did to Adapt….

Prices and Units Going Down We eliminated empty marketing in newsprint and cut unnecessary expenses.

Listings Would Take Longer to Sell

We took steps to create ongoing client experiences through the weekly Market Action and Property Traffic emails. And to protect ourselves, we created the Seller Packets, which locked in a 6% commission for a full nine month listing.

Listings Would Be Harder to Sell

Because it would be more competitive selling listings, we took steps to give our own sellers an advantage on RandRealty.com – more featured status on the front page, on search results, and on property detail pages, and more enhancements with higher quality photos, videos, and mapping. We also expanded paid listing syndication to better market listings.

Harder to Generate and Convert Buyers

Knowing that it would be harder to cultivate and keep buyers, we improved lead generation from RandRealty.com, adding callouts to drive more buyers through our system. We also created the R4L program to help agents build their referral databases to generate high quality leads, and initiated exclusive buyer agreements to lock buyers into our agents during their long searching process.

GROWTHAHEAD

Consider, for example, some of the changes in the company over the last seven years:

• Growth within our territories. As of 2005, BHG Rand had about 17 offices in Westchester and the Hudson Valley, with about 500 agents. We now have 25 offices in that region, with over 700 agents.

• Territorial expansion. Just in the past two years, BHG Rand has now expanded into two new markets in northern New Jersey – Passaic and Bergen counties – in an attempt to fully service clients who are looking at broad geographical areas.

• Technological Innovation. BHG Rand has continued to be a leader in technological innovation in our region. Just like we were the first regional company to put our inventory online in the late 1990s, we were the first company add high-resolution photos, mapping, blogging, and research tools to our website. And in Randcenter, we created a series of programs to help agents run their business, including the letter-writer function in Contact Manager, and a host of creative presentations on Presentation Center.

• CORE. Over the past five years, BHG Rand has pioneered an innovative approach to agent development in the “Client-Oriented Real Estate” program, which has led to a series of initiatives to better help agents service their clients: the disclosure packets, the Realtor for Life program, the Orientation Guides, the Consultation Guides, and more. We are the only company in the country, much less the region, that is setting out to change the client service experience in the real estate industry.

• The Breakthrough. Even while revenues were declining, BHG Rand implemented a dramatic change in our compensation policies, adding an 80% split level that can be reached at about $25,000 in agent earnings and providing agents with myriad choices for starting splits and personal assistant time.

Thus, those 2005 sessions were instrumental in sparking actionable programs, tools, and resources that helped us get weather the storm of a declining market. Accordingly, we believed it would be similarly helpful to hold a series of forums

now that the market seems to be going through a market change again. And just like last time, we hope that the ideas generated in those forums will help guide us in continuing to innovate over the years to come.

The purpose of this year’s “Market is Changing” seminars was to answer three basic questions:

1. How is the market changing?

2. How will those changes affect our business?

3. What can we do to adapt to those changes?

We will take each of those questions in turn. Ultimately, our goal for the forum was to generate ideas for new processes, programs, and tools that we could develop or implement to help us thrive in the new market.

Question #1: How is the Market Changing?

The market is changing. We are seeing it throughout the industry, with transactions and sales prices rising throughout the country after many difficult years. More importantly, we are seeing it in our local markets, with sales up from last year in every region and prices stabilizing and actually up from the bottom they hit in late 2009. We believe that our local housing market is slowly working its way through the end of a market cycle that began in the last 1990s, and that we are poised in the next few years to start a new market cycle that will bring a true seller’s market that will drive both prices and transaction up through the end of the decade. In this section, we’re going to review the economic fundamentals of the housing market cycle, and show how that cycle has played out in our regional markets. Although many of you have anecdotal evidence that the market has started to turn around

– i.e., maybe you’ve started to see inventory decline, or you had your first multiple bid situation in years – it’s still important to back up your first-hand impressions with actual market data and a full understanding of how the market cycle works.

The Market CycleThe fundamental economic rule of supply and demand says that for a fixed supply of goods (i.e., a housing inventory), any increase in demand is going to drive prices up, and decreases in demand will push prices down. That simple rule is what drives the housing market cycle, which moves through a predictable series of fluctuations depending on the interplay of inventory and buyer demand.

Seller’s Market Correction Buyer’s Market Recovery

Buyer Demand High Declining Low Increasing

Inventory Low Increasing High Declining

Sales Increasing, then stabilizing

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then stabilizingIncreasing

Average Sales Price Increasing Stabilized Declining Stabilized

The below chart identifies the basic properties of the market cycle stages:

GROWTHAHEAD

Here’s how the market cycle plays out.

Seller’s Market. As a seller’s market begins, we see rising buyer demand and low inventory, which has a tendency to push transactions and prices up. This goes on for a period of time, with prices continuing to rise so long as buyer demand stays strong. At some point, though, prices get so high that buyer demand ebbs – buyers become skeptical of the high prices and lose some of their urgency. This leads to a transitional period that we’ll call the “Correction”.

Correction. In this transition out of the seller’s market, we have a disconnect between sellers and buyers: sellers still think that it’s a seller’s market, and demand price appreciation, but many buyers are too skeptical to meet those price demands. So what happens is that transactions fall as fewer buyers rush to meet seller demands, but prices hold out for just a little longer. Why? Because the homes that sell involve those holdout sellers and the diminishing number of buyers still willing to meet their price – thus, the homes that close are still selling at the “seller market” price. Over time, though, as transactions fall, inventory grows, and it becomes increasingly difficult for sellers to insist on price appreciation. At that point, prices start to fall, and we enter a buyer’s market.

Buyer’s Market. In a buyer’s market, the buyers have the upper hand. Inventory is high, sellers are in retreat, and prices are falling. Transactions also fall, because the reduction in buyer

demand results in fewer and fewer buyers looking in the market. Indeed, the very fact that prices are falling makes buyers reluctant to pull the trigger, because they’re afraid to buy a depreciating asset. So prices continue to go down, which drives transactions down even more. Over time, though, we reach a point where prices have come down so far that they become attractive to buyers who now start to take a second look at the market. They start to scoop up bargains, which stabilizes both the transactions and ultimately starts to prop up home prices again. That leads to the Recovery.

Recovery. In the Recovery, we start to see sales slowly start going up again. Buyer demand is rising, spurred by the perception that housing has finally become more affordable and a “good investment” again. Inventory starts to drop off as buyer snatch up their bargains. Ultimately, all this buyer demand starts to put some pressure on home prices, which start to rise. So where does this leave us? In a situation with low levels of inventory, rising buyer demand, and upward pressure on pricing. This, of course, leads us back to the beginning, and the start of a Seller’s Market.So that’s how the housing market cycle develops: a Seller’s Market with rising prices and transactions leading to a transitional Correction phase with flattening prices and declining transactions, which brings on the Buyer’s Market where prices and transactions both fall, until prices fall so much that buyer demand comes back and brings on the market Recovery. And then, of course, the whole cycle starts up again.

This brings us to the big question: where are we now? In our current market conditions, what we see is the following:

Buyer demand is going up.Inventory is going down.

Sales are starting to go up.Prices have deterioriated a bit, but are stabilizing.

In other words, the part of the market cycle that we’re in looks a lot like “Recovery.”

Illustrations of the Market CycleYou can see this market cycle play in our regional housing markets. For example, look at this graph entitled “Westchester Inflation-Adjusted Average Sales Price,” which sets out the inflation-adjusted average sales price for Westchester County going all the way back to 1981. We use Westchester because it’s the only county for which we have a full 30 years of data, which allows us to see an illustration of two full market cycles. $300,000

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Westchester Inflation-Adjusted Average Sales Price(Source: MLS data)

What you see on the graph is a perfect articulation of the market cycle playing out twice: from 1981 through 1996 and from 1997 through 2012. In both cases, you have a similarly shaped curve that goes up during the seller’s market, tops out at the correction, goes down during the buyer’s market, and then flattens out during the recovery.

• First Market Cycle (1982-1996): We see the cycle start from 1982-83, when prices rise for what was the first time in years. That kicks off a Seller’s Market that continues until about 1987, when prices top out and the market starts a transitional two-year Correction that turns into a Buyer’s Market that lasts from about 1989 through 1994, until it flattens out into Recovery from 1994-96.

• Second Market Cycle (1997-2012): This cycle starts in 1997, as prices start to go up as the Seller’s Market starts up. That Seller’s Market continues through to about 2005, when prices plateau and we start the process of the Correction. That lasts until 2007, when the Buyer’s Market takes hold and prices plunge for two years, spike up for one, and then gradually recede through to 2012.

Note that both market cycles last about 15 years. The first cycle starts around 1982, and lasts until about 1997. The second starts around 1998, and lasts until at least the present day 2012. And in both cases, prices rose for four or five years, flattened out for two or three, then fell for three or four, and then flatted out again. Both cycles play out the same way.

The Three Market Distortions of 2005-2010In looking at the graphs we’ve supplied, you might have an objection – you might notice that the clean, fluid wave cycle seems to get a little little choppy in the 2007-2010 period, where it goes down, then up, then down again, then flat. That makes the second wave look a little different from the first. You might look at that and think that the two market cycles aren’t in fact the same.

That’s a fair point. The two cycles followed the same trajectory, but they aren’t exactly the same. As anyone who has been in the market over the last seven years can tell you, the buyer’s market that we went through was harsher and more volatile than what we had seen in the past.

But the difference is not something that was inherent to the market cycle, and doesn’t disprove the idea that the last fifteen years have conformed to basic economic fundamentals of supply and demand. Rather, those aberrations from 2007-2012 were caused by three major artificial distortions of the normal market cycle that impacted the market during the last ten years. We’re written about these market distortions at some length on the “Market Intelligence” blog and the Rand Quarterly Market Report. The basic idea is that the normal evolution of the last market cycle was distorted by three outside influences that created many of the severe shocks that we experienced over the last ten years.

Here are the three distortions:

Credit Bubble. The first distortion was the “credit bubble” that was created from 2005-2007 by the expansion of available credit to unqualified borrowers, which artificially expanded buyer demand and kept pushing prices up for two years when they should have been flattening. That’s why you see prices going up in that 2005-07 period when they provably should have been plateuing the way they did in the 1987-89 comparable period of the last cycle.

Financial Crisis. The second distortion was the financial crisis of 2008, which was obviously precipitated by that credit bubble. As you know, the market came crashing down around us in late 2008, and over the next eighteen months we had prices come down over 25% across the region. So instead of a nice soft decline in pricing like we had in 1989-1994 over the last cycle, we had a dramatic fall that took place over less than two years.

Tax Credit. The third distortion was the Home Buyer Tax Credit, which spurred another artificial increase in buyer demand inlate 2009 and early 2010. That’s why you see that odd spike in home prices in 2010 – because government intervention pushed prices up for a brief period when buyers were rushing to take advantage of the tax credit. Again, that’s why the curve looks different from the comparable period of the last cycle, when prices went slowly but surely down from 1989-1994.

In other words, the market cycle looks a little different this time than in the 1981-1996 period because the market was artificially distorted – first by the credit bubble that extended the price appreciation for another two years, which led to the financial crisis, which led to the government intervention in the form of the tax credit. If not for the credit bubble, which led to the rest of the distortions, we feel that the market would have started to crest in 2005, started to come down in 2006, and come down more gradually from 2006 through 2011 or so (a five year period comparable to the 1989-1994 period of the last cycle). That’s why this market felt different – because it WAS different.

For another view of this dynamic, take a look at the graphs on the right for each of the primary markets we service: Westchester, Rockland, Orange, and Passaic Counties (we do not yet have historical data for Bergen). What the graphs shows are the sales and average prices for Westchester and the Hudson Valley over the last decade or so. They are interesting to look at for two reasons. First, because they show the interplay in each region of sales and prices during the height of the Seller’s Market, through the transitional Correction, on to the Buyer’s Market, and then to what we believe is the Recovery. Second, these graphs also clearly show the impact of the three market distortions.

In each case, what you see is a clear demonstration of the latter part of the most recent market cycle, and how that cycle was distorted from 2005-2010. In particular, review the following parts of those graphs:

• Credit Bubble. You can see how prices continued to appreciate in 2005-07 even though transactions were falling, because of the credit bubble that propped prices up even when they should have started to fall.

• Financial Crisis. You can see how prices in each of those markets basically fell off a cliff in 2009, giving back years of appreciation in just a one- or two-year period.

• Tax Credit. How transactions spiked in 2010 because of the tax credit. Indeed, in Westchester, the transactional surge actually was enough to temporarily drive up the average sales price.

This graph shows the impact of the three distortions beautifully. The point is simple: the market evolves in a very predictable cycle, and even extreme situations like the ones we experienced during the latter half of the last decade do not change the cycle – they only distort it.

The graphs are also helpful, of course, because they point the way forward. If you look at each of them, what you’ll see is that prices have deteriorated a bit but that transactions are starting to come back. That’s a good indication that buyer demand is increasing, which supports the view that we are starting to look at a market that is moving into Recovery and eventually into a Seller’s Market.

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The purpose of this part of the Forum was to make one thing clear: the market is clearly moving in the right direction. Sales are going up, and we can expect that sales will continue to rise year after year for the next several years as buyer demand continues to increase. And we can also expect that at some point in the next few years, this increased buyer demand is invariably going to lead to price appreciation.

All this brings us to the next question: how will market change affect our business?

Conclusion

Question #2: How Will Market Change Affect Our Business?

The biggest difference between the agent forums we held in 2005 and 2012 was the attitude and spirit that agents brought to this year’s discussions. Agents were much more hopeful and optimistic about the market that is coming now than the market that they were dreading back in 2005. Why? Because in seller’s market, we’re likely to see increasing units and appreciating sales prices, which means that we will have more revenue being generated throughout the industry.

But that doesn’t mean that everything’s going to be easy. Indeed, one of the main themes that developed during this year’s forum was a reminder that a stronger market – one with rising

average sales prices, increasing units, and rising revenue – brings with it a brand new set of challenges and difficulties. After all, agents in 2003 didn’t skip around the office singing happy tunes because the business was so easy back then. Rather, they just had a different set of complaints based on the types of problems that we are likely to see come back into the market.

To illustrate this, we set up a simple table to identify aspects of the market that will be changing, how they would be changing, and how those changes would affect the business. Here’s that chart.

CategoryHow is

The Market Changing

How will it impact the business?

Unit Count Increasing Sales will rise, which is good for revenue purposes, but it also means that agents will have to handle a larger number of transactions at a time. This will put some stress on them.

Sales Price IncreasingPrices will be going up, which again is good for revenue. It also means, of course, that we are going to see even more problems with appraisals that are going to come in low when they’re based on six month old comps that sold in a market that has since appreciated.

Multiple Offers

Increasing With increased buyer demand comes an increase in the number of multiple offer situations, which are always very stressful and distressing to buyers, particularly those who lose out.

Listing Competition

IncreasingWith more money in the market comes more competition. Listings are going to be in high demand, which means that more agents will be chasing fewer listings and increasing the difficulty of getting them.

Commission Pressure

Increasing

With increased agent demand for listings, companies and agents will be tempted to drop their commission – particularly if they think they can get homes sold very quickly and with a minimal marketing investment. We saw this type of commission pressure in the 2001-2005 market, and it’s going to come back.

Alternative Models

Increasing

We’re going to see the return of alternative business models, like low-service realty companies that will offer reduced service or a menu of offerings for reduced commission (i.e., put a home on the MLS for $500). We need to be ready to respond by showing how we can provide a much more effective marketing and service experience, and ultimately bring sellers a better price for their home.

Buyer Urgency Increasing

Buyers will become very anxious and urgent in the new market. They won’t be able to take their time looking at homes, because well-priced properties are going to move quickly. This means that buyers are going to require lots of quick attention and handholding. It will be very difficult to keep them happy, particularly those that want to go see every house the minute it hits the market, and blame you when they lose out on bidding wars.

FSBOs IncreasingAs it becomes easier to sell a home, more homeowners will be tempted to sell it on their own, putting more pressure on commissions but also providing new prospecting opportunities for aggressive agents.

Agent Count Increasing

As the industry starts to generate higher levels of revenue, we’re going to see a lot of new agents entering the business. This not only means more competition, but more stress on seasoned agents who will have to handle both sides of the transaction when dealing with neophyte agents who don’t know what they’re doing.

Appraisal Problems

Increasing If you think we have appraisal problems now, imagine what it’s like in a rising market, where the six-month old comps are 4-5% below where the current market is.

Factors that will Increase in the New Market

Factors that will be Declining in the New Market

CategoryHow is

The Market Changing

How will it impact the business?

Listing Inventory

Decreasing

As more listings sell, inventory will dwindle. This will put added pressure on price, as well as fuel the urgency that most buyers will feel. Well-priced properties will move very quickly once they hit the market.

Listing Time on Market

Decreasing

We have gotten used to working with sellers for a long period of time. That’s going to change as homes sell more quickly, which means that it will be easier to deliver an exceptional client experience to sellers – you can cram seven or eight months worth of service offerings into a six week period. It’s helpful that we’ve developed a series of service initiatives designed to cover the long haul, because they will be that much more effective in the short term.

Buyer Side Commission

Decreasing

We are going to start seeing brokers skimp on buyer side commissions. In some cases, they will be internet brokers who get a minimum fee to put listings in the MLS but make no offer or a limited offer to buyer agents. In other cases, even traditional service brokers will be cutting their commission, and putting the burden on the buyer agents. Agents will need to protect themselves by signing exclusive buyer agreements to ensure they can get paid.

Client Service Time

Decreasing

In a buyer’s market, agents work with clients for a long time: sellers whose homes take a while to sell, and buyers who take a long time looking. That’s going to change. You will find yourself working with more clients, but for a shorter period of time. The challenge will be getting those clients, and keeping them happy when they want to move quickly.

Deal Making Time

DecreasingIn the new market, it will not take a long to put together deals. Sellers and buyers will be moving quickly. The challenge will be managing an increasing number of transactions at one time.

Seller Urgency Decreasing

Sellers will not have the same urgency that they’ve had during a buyer’s market. They’ll be able to, for example, start looking for a new home even when they haven’t sold their old home, something we discouraged in the buyer’s market. You won’t need to maintain long-term relationships with sellers, because their homes will sell more quickly.

Seller Discounts DecreasingSellers will not have to discount their homes as severely. We will start seeing more near-price, full-price, and even above-asking offers.

Expireds Decreasing

We will start seeing fewer expired listings hit the market, and the ones that do will likely have severe problems that kept them from selling. If you prospect expireds, it will be slim pickings, and you might want to turn your attention to FSBOs, which will be increas-ing.

How is the Industry Changing?These market changes might all seem very familiar to many of you who have been in the business for more than ten years, because you’ve all seen a market like this before. What we’ve described above is simply the predictable impact of a seller’s market, just like the one we experienced prior to 2006: an increase in competition, downward pressure on commissions, a rise in transactional load, and higher levels of buyer stress and urgency. In some ways, we just need to re-learn the lessons that we learned in that last seller’s market, and adjust our business to accommodate these changes.

But the market is not the only thing that’s changing – we’re also going to start seeing changes in the industry, especially those sparked by technological innovation over the past ten years. After all, the last time we saw a seller’s market like the one that’s coming, we were living in a different world, one without smartphones and Facebook and Yelp and video and all sorts of technical innovations that are going to make the new market very different from the old one.

The point is that it would be foolish to think that all you need to do to be successful is to go back to doing business the way you did in 2004. The industry has changed, the technology has changed, and even the consumer has changed. And those changes require you to make some changes of your own.

Let’s think about those industry changes, and how they might impact our business in the next several years:

1. Industry Marketing TechnologyThink about how marketing technology has changed in the last ten years. During the last seller’s market, brokers were still doing full-page ads in the newspaper, lots of classified ads, and relatively few brokers even had websites. Even if the brokers had websites, they probably had a handful of pictures, no video, no mapping, and no other bells and whistles. Now, virtually all major brokers have full-featured websites, allowing for multiple high-resolution photos, mapping, video, school reports, and everything else. And major listing aggregators like Trulia, Zillow, and Realtor.com amplify the kind of online marketing that agents do for their sellers.

What does this mean to you? Most importantly, it means that good agents can really differentiate themselves from mediocre and poor agents by making full use of modern marketing technology. In other words, the old technology leveled the playing field between good and bad agents, because all you had to do to market a listing was write a short classified ad, take a few pictures, and load them into the website. You didn’t have a lot of opportunity to differentiate yourself in your marketing – after all, how many different ways are there to write a four-line classified and take a low-resolution photo of the front of the house? But now, marketing requires you to have a number of high-level skills: the ability to take good photos, to write good advertising copy for your online description, and even make video presentations. Moreover, your implementation of those skills will be amplified – the results of your marketing will be on display 24/7 not only on our site, but on all the competing broker sites, and on the aggregator sites. If you’re not good at marketing, there’s no way to hide. People will know.

This also means a raising of the bar for the competitive challenge that you’re going to face. You’d better take advantage of that technology, or you’re going to start losing listings to the people who do. You know that we’ve been preaching for years the importance of doing outstanding listing marketing as a service to your seller clients, which remains true. But in the coming market, providing an amazing market experience is no longer going to be as necessary to SELL the listing, but it’s going to be crucial to GET the listing. If you can’t show a seller how well you can market a listing online by taking advantage of all these new technologies, you’re going to lose that listing to alternative brokers who do nothing but put a listing online with a bunch of photos and a rudimentary video. After all, why should a seller pay you 6% when an online broker pretty much does the same thing for $500? The key to the listing presentations of the next few years will be your ability to show sellers how well you market listings online, literally by pulling out a laptop or tablet and showing them your current or recently sold listings and comparing them to how the competition markets their properties. That’s what’s going to get you -- or cost you – listings in the new competitive environment.

2. Communication TechnologyGoing back ten years, it was unusual for agents and clients to communicate by mobile phone: clients still called you on your office phone and waited for you to get a chance to return their call when you got back to your office. One study in March 2002 showed that only 62% of Americans owned a cell phone. Moreover, do you remember how different cell phone usage was back then? You probably had a limited data plan where you would wait until 7PM to make a call because you didn’t want to use your “daytime minutes.” You could only use it in your home area, not anywhere in the country, and you couldn’t even call long distance without incurring additional charges. More importantly, it was just a phone. You made calls on it. You didn’t send text messages, you didn’t check your email, you didn’t surf the web.

Compare that to today: according to Pew Research, 85% of Americans have a cell phone, and they use them without limitation because they probably have unlimited talk minutes throughout the country. Indeed, fully 45% of Americans even have a smartphone -- little mini-computers that they carry around with them and get phone calls, text messages, emails, and even now video conferencing abilities.

In other words, people have so many more ways to get in touch with you than they did even five years ago. Now, you might have already adapted to the new realities of these communication technologies. After all, you have a smartphone, you know how to check your email every day, and you’re even using text messaging to communicate with clients. That’s great. But here’s the new challenge – you’ve been using those communication technologies in a market that has not had a high level of urgency. You’ve been dealing with sellers who had no expectations that you would be selling their home in a matter of days or weeks, and with buyers who were confident that they could take their time and wait for the right home to hit the market.

But think about how these changes in communication technology are going to impact your life when you’re dealing with a seller’s

market, with its higher transactional load, more buyer urgency, and quicker deals. If you think that you’ve been inundated with communications from your clients over the last few years, you haven’t seen anything yet. You’re going into a market where anxious clients are going to demand immediate attention, and they’re going to have any number of ways to reach out and grab you. Your buyers are all going to have alerts for properties hitting the market that are going to pop right up on their phone, and they’re likely to text or call you at all hours of the day and night as soon as they get those alerts. And if you’re not quick enough, they’re not going to stay with you. That’s a big difference from ten years ago.

So how do you adjust to these changes? First of all, just having a cell phone isn’t enough anymore. If you’re still one of those 54% of Americans without a smart phone, it’s time to get one. You’re late to the party, but you’re still just fashionably late – but if you wait any longer, you’re going to be showing up when the hosts are already in their pajamas. Second, even if you’re comfortable with new communication technologies, you’re going to need to develop systems that can handle your increased transactional and communication load, even if it’s just a standard set of instructions for clients about how to reach you and when you are available to them.

3. Information Technology and the Changing ConsumerEven while the industry changes, the consumer is going to be changing. First, we’re going to see demographic shifts in the people who are going to become our clients. The baby boom generation is now either nearing or well into retirement, and we expect that a number of empty-nest homeowners in our area are going to be looking to sell once they perceive that prices are going back up. We’re probably reasonably prepared to service them, because those are the people who were our clients back 10 or 15 years ago, when they purchased the house that they’re now going to be selling.

But we’re also going to see a rise in the number of echo-boom clients, the Generation X and Y consumers who are going into their late 20s and early 30s. Those clients are going to be different. They’ve never owned a home, and they came of age at a time when real estate was in turmoil. The recent survey published by Better Homes and Gardens Real Estate revealed that these Generation X clients have surprisingly positive attitudes about buying a home, and believe in the virtues of home ownership. So that’s a good thing. But we also have to recognize that these clients are going to be significantly more tech-savvy and demanding than the boomers that we serviced during the last seller’s market. They grew up with the internet, and they’re not going to have a lot of tolerance for an agent who cannot keep up with them. Moreover, those clients are going to need a LOT of education, because most of them have never bought a home, and they don’t understand and often fear the process.

But it’s not just demographics. Fifteen years into the internet era, all clients, regardless of their age, are going to be significantly more well-informed than they were during the last seller’s market. Think about how much more information is available about real estate than ten or fifteen years ago. Back then, you couldn’t even get good information about the inventory on the market, much less any data on recent sales.

It’s not just real estate – consumers in all industries have much more information at their disposal than they did even ten years ago, and it has changed the way they act. They go into Best Buy to look at televisions, then buy them online on whatever shopping site provides the best price for that model. They don’t hire an employee unless they’ve googled their name or looked at their profile on Facebook. They don’t buy a book unless they’ve read the reviews on Amazon. They don’t go to a restaurant unless they’ve checked it out on Yelp.

So how long is it until they don’t hire a real estate agent unless they’ve checked them out online first? We’ve already started to see agent ratings show up on the listing aggregator sites like Trulia, on review sites like Yelp, and any number of dedicated agent rating sites that have not yet taken off. Those types of sites eventually reach critical mass until they become almost a mandatory part of a consumer’s purchasing process. In other words, don’t be surprised if in two years clients do not hire an agent unless they have (1) googled the agent, (2) checked out the agent’s Facebook and Linkedin pages, and (3) looked for online reviews.

And it’s not just online reviews. We’re also going to see the rise of data-based performance sites that actually measure an agent’s performance on various metrics that will demonstrate whether the agent does a good job in servicing clients. Again, the data is out there, just waiting for some website to find the right model for presenting it. So imagine a situation where a website gains prominence that evaluates real estate agents on the percentage of their listings that sell, how quickly they sell, and how much they are discounted from the original listing price? And then think about how well you would show up in those rankings. Those sites are coming, it’s only a matter of time. And when they do, the best agents will start to get clients reaching out to THEM because they provide an objectively superior service.

Why do you think we’ve spent the last five years talking about the importance of providing an outstanding client experience? I’ve always joked that people are choosier about the stylists who cut their hair than the agents who sell their homes – after all, few women would walk into a salon and take the “up person.” That’s going to change. Clients are going to start checking out their agents before they make a hiring decision, because we live in the “Information Age,” and that information is just out there waiting to be evaluated.

The market is changing, and that’s a good thing. Sales will be going up, prices will start rising, and we’ll have more revenue coming into the industry. The challenge is going to be whether we can increase our share of that revenue. As the market improves, the competition will grow. We need to be prepared for that competition, and for the new market and industry challenges that we will face.

Conclusion

Question 3: What Can We Do to Adapt?

1. More competitionThe most important positive impact of market change, of course, is that we will have more revenue in the industry. A combination of increasing average sales prices and higher levels of transactions will lead to an increase in volume, which should lead to more commission revenue throughout the industry. But more money in the industry means more competition – more companies and alternative business models entering the business, and more agents getting their license to cash in.

We’re going to see lots of new companies come into the business, including alternative brokerage models that will likely involve internet-only services or a “menu” of services that will undercut traditional brokerage compensation. We all remember the last seller’s market, with the rise (and fall) of YHD/Foxtons and the flurry of “we’ll list your home for $500” startups. We’re going to see that again, and we’re going to need to be prepared.

How do we adapt? Simply put, we’re going to have to be better at our jobs. We’re going to have to deliver a better service experience to clients, and we’re going to have to deliver better results by selling their homes quicker and for a better price. We’re going to have to deliver a better service experience for buyers, by being more responsive, more empathic, and providing a superior online experience at randrealty.com. And most importantly, we’re going to have to be better at generating and converting clients, by aggressively responding to online leads, providing better listing

presentations and buyer presentations, and engaging in smarter, more modern lead generation campaigns.

2. More Pressure on Listing CommissionsWhenever it becomes easier to sell a home, which always happens in a seller’s market, we see more pressure on commissions. If homes are selling within two weeks of hitting the market, even traditional brokers start to drop their commission demands on the theory that they don’t have the same marketing costs. Moreover, the rise of alternative business models that will provide low-service for low-fees, and an increase in the number of homeowners tempted to FSBO their home, will likely drive commissions below their current level.

How do we adapt? We’re going to need to become better at justifying our commission. Most importantly, we need to demonstrate to homeowners that a full-service broker is going to provide them with a better service, a better marketing campaign, and a better price for their home. What’s the easiest way to do this? Simple: we need to do a better job marketing our listings. We’ve been saying for years that agents need to take advantage of the full range of resources available to market homes in the modern technological age: taking really good high resolution photos; posting more photos of their listings online; writing fully-featured property descriptions rather than three-lines of abbreviated quasi-classified ads; learning how to use video to market a property; even creating portfolio photo books to show the property off in a new way.

Accordingly, here are ten of the most significant industry challenges that we can expect as the market changes, as well as some suggestions about how we can adapt

to those challenges and thrive in the new business environment:

1. More competition.2. More pressure on listing commissions.3. More pressure on buyer-side commissions.4. More buyer urgency.5. Shorter client service times, but a heavier transactional load.6. A new set of transactional stresses.7. An increase in client selectivity.8. The return of the multiple offer situations.9. An increase in appraisal problems.10. An evolution in lead generation.

The next question, and the most important, is what we can do to adapt to the market and industry changes that will be impacting our business. Obviously, not all of these major changes are going to happen overnight – indeed, it might be several years before we

start seeing the seller’s market take hold and prices start going up. But even if some of these impacts are a few years off, it’s important to start preparing now.

We’ve always argued that those marketing techniques were necessary to help your listing stand out in a crowded marketplace, to help get your listing sold. Sadly, not enough of you have taken our advice in that regard, and we still see listings with only a dozen photos, classified ad copy, and no video. Well, that’s not going to be enough in the new environment. Where providing superior marketing has always been necessary to help sell your listing, now you need to provide great marketing to GET THE LISTING. In other words, the best way to compete against the increased competition for listings, and the commission pressure that you’re going to face, is to show sellers how well you market your current listings. That means high-quality photography, a maximum number of photos taken for each listing, engaging copy, video, and portfolio books. You don’t need those things to sell the home, not in a seller’s market, but you DO need those things to GET THE LISTING IN THE FIRST PLACE.

Providing great listing marketing is no longer a matter of choice. It’s a matter of survival. If you want to be able to get listings in a seller’s market at a decent commission, you need to commit to a higher level of marketing service for your listings. It’s that simple.

3. More Pressure on Buyer-Side CommissionsAs we see commissions go down on the listing side, we’re also likely to see some downward pressure on buyer-side commission, as discount brokers offer out minimal compensation and even traditional brokers reduce their buyer-side offers because they’re taking listings at a lower commission rate. Right now, we see most listings in our area offering out 2.0% to 2.5% on the buy side. That’s going to change. We would not be surprised if 2% becomes the new standard, with many brokers offering out even less than that.

How do we adapt?You need to protect your right to collect a reasonable buyer-side commission when you’re working with your buyer clients. We initially created the exclusive buyer agreement for just this situation, back in 2003 when we were concerned about certain low-service internet companies that were offering out 1% as buyer agency commission. Unless you are willing to work for 1% or so, you need to start getting those buyer agreements signed. Learn how to get them signed, and learn how to present offers that condition acceptance on the seller paying you your reasonable fee.

4. More Buyer UrgencyWe have gotten used to an environment in which buyers have the upper hand, and can afford to take their time to “wait out” the market. But this lack of urgency is going to change, which is good insofar as you’ll be able to work with buyers for a shorter period of time, AND be able to get them to go out with you. No more chasing them down to try to go look at a new listing. You’ll likely find them calling you – often late at night – as soon as they see the email alert on their smartphone.

But here’s the negative: although buyers will be moving more quickly, they’ll be much more stressed out and frantic. This will require good hand-holding skills as well as responsive communication systems – particularly since anxious buyers have so many more ways to get in touch with you than they did 10 years ago. The last time we were in a seller’s market, buyers didn’t have access to text messaging and they (and you) didn’t have smart phones that raise the expectation that you’re on top of your email on a minute-by-minute basis. We will see buyers obsessively checking their email for alerts on new listings, and immediately contacting you to go see that property right away.

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How do we adapt? As buyers move more quickly, you’re going to have to be even more responsive to their needs. Service to buyers is going to require a lot more work than you’ve had to do in the past, because you’re going to need to watch the market much more carefully to monitor new listings coming on the market. After all, the last thing you want is your buyer to contact you about a listing you didn’t even know was available! So if you don’t have a smart phone, you need one. And if you’re not used to handling a heavy load of alerts and emails coming from your clients, get used to it quickly and set up your own personal systems to manage your clients, your time, and your communication load.

5. Shorter Client Service Times, But a Heavier Transactional LoadHere’s the good news: because homes will sell more quickly, and because buyers are going to need to move more aggressively in a competitive market, we will likely see agents having to work with clients for a shorter period of time. You all got used to working with sellers for extended periods because their homes stayed on the market for such a long time. And you all got used to working with buyers for months on end because they didn’t have any real urgency to move quickly – after all, the homes they looked at one month were still for sale months later. That’s going to change. Homes will sell more quickly, and buyers are going to have to move fast if they want to get into contract on the right home. The good news is that you’ve hopefully developed client service skills – and the facility with the Rand CORE service tools – that you’ll be able to deliver an even more impressive service experience given that you’ll be doing all that work within a shorter period of time.

Here’s the bad news: you’re going to have to deal with more transactions. Obviously, that’s also good news, because more transactions means more money. But it also means more work, and you’re going to have to get used to juggling more balls in the air. More transactions means more time in nitty-gritty paperwork, and you’ll sometimes find yourself going through feast-or-famine: you’ll have so many deals going that you won’t have time to do lead generation, which means that three months later you’re going to look up and you’ve sold all your listings and you don’t have any active buyers.

How do we adapt?Two words: time management. You’re going to need to manage your time better to ensure that you can maintain a steady flow of new clients even while you’re bogged down in transactional work. We’re going to be putting together a training program on time- and self-management that may help, because this is going to be one of the major challenges of the coming market.

Two more words: transaction management. You’re also going to need better systems to manage a flow of transactions, so you’re not running willy-nilly through your day trying to put out fires rather than staying on top of what’s happening with your deals. We’re working on some solutions to this challenge, and had a number of excellent suggestions at the forum.

6. A New Set of Transactional Stresses The new market environment is going to change the type of transactional stress that you’re going to feel. You’re all used to the stress of trying to get transactions closed, handling listings

for a long period of time, and getting buyers to pull the trigger. And, obviously, you’re used to the stress of trying to make ends meet at a time of declining transactions and sales prices. Those problems will generally subside, to be replaced by a whole new set of issues: handling multiple transactions, trying to get a decent commission from your sellers, and satisfying demanding and anxious buyers. The market changing doesn’t mean that the business is going to get easy, it just means that it’s going to be hard in a whole new way.

What can we do about it? The best way to deal with stress is to avoid situations that are going to create stress in your life. How do you do that? By creating systems that will facilitate your transactions – ways to anticipate and handle multiple transactions, ensure a reasonable commission, and set up predictable communication procedures when dealing with clients. For example, if you know that buyer clients are going to be stressed out, do your best to reassure them in your first consultation with them that you will be on top of the market, to alleviate the anxiety that they’re going to feel about missing out on new properties getting listed. And then live up to those promises by actually creating systems that ensure that you’ll provide immediate notification when new listings hit the market. In other words, if you know which situations are going to create stress in your life, build systems that will facilitate those situations and ease the resultant anxiety.

7. An Increase in Client SelectivityAs we have discussed, clients have traditionally not been particularly selective about the real estate agent they hire. They’ll walk into an open house, and end up working with the agent who was sitting there. They’ll call a real estate office, and get the up person. They’ll fill out a form online, and get whoever the agent is who answers their email. It’s really quite amazing that clients are not choosier about their real estate agents.

That’s about to change. As consumers become better informed, with greater access to information, we believe that real estate clients are going to become more selective about the agent they hire. They’re going to google their agents, look for Yelp or other online reviews, and generally vet both the agent’s testimonials and even at some point that agent’s objective performance when someone finally builds a website that provides data on agent performance metrics.

What can we do about it?We need to be better at our jobs. We need to do a better job marketing our listings, a better job taking care of buyers, and a better job in facilitating transactions. And we need to do a better job getting the word out about the good work we do. Agents need to make sure that they enhance their online presence, that they have strong profiles on randrealty.com and all the other online sites where clients might find or vet them. They need to make sure their clients are writing testimonials on their behalf, hopefully online where potential prospects can find them. In other words, be really good at what you do, and make sure everyone knows it.

The good news from all of this is that real estate brokerage is going to evolve to more of a meritocracy: the better agents will get more clients just by being good at what they do. Well, that’s good news for the agents who are in fact better at servicing their clients. It’s bad news for agents who are not.

8. The Return of Multiple Offer SituationsWe all remember the common experience of the last seller’s market: multiple offer situations where buyers had to present a highest and best offer in a competitive bidding situation. It happened a lot in the last market, hasn’t happened as much since, and is coming back. You’re going to find yourself in multiple offer situations from both sides, and you’re going to need to develop systems and skills to ensure that your buyers’ offers are in fact presented fairly, and to help facilitate your sellers’ evaluation of multiple bids.

What can we do about it?The biggest concern about multiple bid situations is fairness: making sure that buyer clients have their offers presented. Rand is going to be working on a system to allow for a fair submission process for multiple bids on our own listings, and a form that you can use when submitting a multiple bid offer to demand proof that your offer was presented. What you can do is prepare your clients for this possibility: make sure your clients are fully informed about the pros and cons of the multiple offer situation, so that they’re not surprised when they get bad (or good) news.

9. An Increase in Appraisal ProblemsAppraisals have been a real problem over the last few years, particularly because of the quality of the people doing the appraising and the legal restrictions on our ability to actively educate appraisers of local market information. But it’s going to get worse. We’re moving into what we expect to be a rising market, which at times can rise so quickly that even six-month comps are out of date. We need to be prepared for an increasing number of situations in which reasonable accepted offers end up resulting in deals falling apart for lack of an appraisal.

What can we do about it?Rand will be working on a form package that you can provide to appraisers in a legal and ethical way, which might educate them on local market conditions so that their valuations are in line with reality. Again, though, the best thing you can personally do is educate your clients on the possibility of appraisal problems. Make sure they are prepared for the worst, both your buyers and sellers, so that if you do encounter this problem they’re not surprised by it.

10. An Evolution in Lead GenerationLead generation is the one constant in the real estate business: if you are going to succeed, you need a steady stream of new clients. For a long time, we’ve encouraged agents to take a more modern approach to lead generation by providing services to potential clients – for example, the Realtor for Life program and the FSBO and Expired courtesy packages. We think that those methods will continue to work in the new market. And we continue to believe that old-fashioned cold calling and manipulative techniques will be increasingly useless in a market where clients are better-informed and savvier than ever.

Some types of lead generation activities will work better than others in the new market. For example, we expect that we will see more FSBOs and fewer expired listings as the market heats up, so people who prospect those types of leads will need to adjust their emphasis. Similarly, we believe that sphere marketing, like the R4L program, is going to be increasingly important as clients become more selective about who they will work with and increasingly look for personal referrals when choosing a real estate agent. The more clients are conditioned to look for personal referrals from their friends and family, the more effective a program like R4L will be. Finally, to the extent that some clients will still remain unselective, we expect that we will continue to generate lots of lead opportunities out of the RandRealty.com website, which throws off thousands of leads a month, simply because more people are looking on the internet than ever before, so your ability to convert online leads will be extremely important to your success.

What can we do about it?Rand will be working on some new courtesy packages for FSBOs, because we believe that will be a growth area for prospecting. What you can do is simple: find a campaign to do lead generation and stick with it. Hopefully, you were already doing it, but if you were discouraged by the difficulty of generating leads in a down market, you should be enthusiastic about putting more effort into lead development in a rising market, because the rewards and return can be so much greater.

In this Report, we’ve tried to explain the fundamentals of how the market is changing, explain the potential ways that market

change will impact our business, and then discuss ways in which we can all adapt to the change. In this conclusion, we’re

going to try to set out some very specific actionable items that you can take as a “to do” list for dealing with the impact of

market change, as well as explain how Better Homes and Gardens Rand Realty can help you through the process with the tools,

resources, and programs that we already have. The good news, of course, is that we have all made it through a very difficult

buyer’s market, one that stretches back to that first “Market is Changing” seminar in November 2005. More importantly, we

came through that buyer’s market even stronger than when we entered it – Better Homes and Gardens Rand Realty has more

offices, more agents, and a dramatically improved array of agent tools, resources, and programs than we had in 2005. We are

without question a stronger company, toughened by the challenges of the past seven years, and poised for even greater things

in a market that will reward companies that provide high-quality full-service client experiences.

Conclusion

We covered a lot here in this Report, so we thought it would be helpful to itemize some “to do” list items for agents who want to

be able to thrive in the new market environment. So here are ten basic things you can to do help adapt to the new market realities that are coming soon.

Ten Ways to Adapt to Market Change

1. Enhance your marketing on every listing you take. It’s no longer just a matter of trying to sell that listing, but trying to get the next one. Better pictures, better descriptions, video, portfolios – use the tools that we have to do a better job marketing your listings.

2. Build your online reputation. Clients are going to be more selective in looking for agents, so make sure your well-developed profile links show up when someone googles you. Make sure you have a well-written personal profile, and that you’ve updated your profiles on RandRealty.com, BHGRealEstate.com, Facebook, Linkedin, Google, and anywhere else that people might look for you.

3. Educate your clients. Make sure your clients are fully-informed about the entire real estate process, including the potential pitfalls of multiple bid situations and faulty appraisals. Use the Orientation Guides to supplement and enhance the guidance you are always giving when meeting with clients.

4. Get buyer agreements signed. Not only will you forge a stronger relationship with your buyers, but you’ll protect your buyer-side commission from low-service brokers.

5. Establish your transactional process. You’re going to be handling more transactions soon, so set up a process to manage them more efficiently. This could be a simple as a personal “Project Plan” that governs all the steps you need to take to get a deal from offer to closing.

6. Master technology. You need a smartphone, and either a laptop or a tablet for presentations. It’s no longer acceptable to be anti-technology, not with a whole new generation of tech-savvy buyers coming of age.

7. Commit to lead generation. The rewards for lead generation are higher than they’ve been in years. Do the R4L program, work your “inactive leads” file, start a campaign to work Expireds or FSBOs. Do something to generate new leads for yourself, because leads are going to increasingly become deals.

8. Refine your listing presentation. Listings are going to be more competitive than ever, so you need an absolutely killer presentation. Learn how to build rapport through a proper consultation, how to collaboratively build the pricing presentation, and master the value package that we have so that you never lose a listing to the competition.

9. Build a buyer presentation. The most neglected part of our business is the buyer presentation, which few agents ever develop. Build one. Buyer retention is going to be crucial in the new market.

10. Invest in your business. Now is the time to invest in your business, because the potential return on that investment is going to be greater in a rising market. Invest money: buy the tools you need to compete in the new market. Invest time: take classes to master the new skills you will need.

…Are You Changing With It? Special Report:

An Extreme Makeover for Your Productivity, Technology, and Systems to Help You Prepare for the New Market

Joseph W. RandBetter Homes and Gardens Real Estate – Rand Realty

March 2013

Introduction: ...Are You Changing With It?

An Extreme Makeover for your Productivity, Technology, and Systems

Better Homes and Gardens Rand Realty is changing. Over the past five years, we’ve been engaged in the process of what we’ve called “Reinventing Rand Realty,” which we started when we realized that we needed to adapt to changes in the industry and the market. That reinvention has included a complete “makeover” of our company, including our “Breakthrough” compensation program, our leadership, our technology, our service tools, and even our strategic and geographic direction.

Most significantly, of course, is that we have worked to implement the Client-Oriented Real Estate (“CORE”) philosophy throughout our company. We believe that our commitment to providing an outstanding client experience to our buyers and sellers can be a differentiator in the market place that can drive our growth and continued success. So over the last five years, we have worked to create the systems, resources, and programs that follow the CORE philosophy: the “windows never get dirty” approach to client service, the “Service-Oriented Lead Development” (SOLD) method of lead generation, the consultative version of listing and buyer presentations.

And over that time, we’ve created tools that we believe have changed the company. Disclosure Packets that ensure our clients get a professional presentation of their legal documents. Project Plans that identify and codify best practices, and which can eliminate errors in client service. Orientation Guides that inform, educate, and prepare our clients for the buying and selling process. Consultation Guides that lead you through a consultative presentation with your clients. And lead generation tools like Realtor for Life, the FSBO and Expired Courtesy Packages, and the PROPs coaching program to help you generate a consistent flow of new opportunities.

So the next question becomes: since the company has changed, and with the market changing, and the industry changing -- Are YOU ready for a change? That’s why Better Homes and Gardens Rand Realty has put out this Special Report on how you can make over your business to adapt to the changing market and industry environment. The Report derives from a series of seminars that we held at Better Homes and Gardens Rand Realty from November 2012 through February 2013, and comes in two parts:

The Market is Changing…On the “flip side” of this book, you can find the half of the Report that deals with the coming changes to the real estate market, how they will impact our business, and what we can do to adapt and thrive in the new environment. That part of the Report derives from the “Market is Changing” seminars we held in November 2012, and includes not only an expanded version of my notes for those presentations, but many of the ideas that came out of the open forum we had with over 500 Rand agents. You can find this part of the Report just by flipping the book over.

…Are You Changing With It?This part of the Report comes out of the seminar series we held in January and February 2013 entitled “Extreme Makeover: Real Estate Agent Edition.” Here, we discuss how you can implement change in your own business: how to improve your productivity, how to use technology in your business, and how to implement the CORE systems to generate, convert, and develop your clients.

At the end of this Report, in the “centerfold,” you’ll find a “Project Plan” for making over your business for the new market, as well as a list of the innovative training and education program that we will be launching in April 2013 and continuing through the end of the year.

The CORE project will never be complete. We will constantly find new and innovative ways to help agents build their business and service their clients needs. But we are a lot further along than we were when we started. And as we often say, no other real estate company or franchise is even trying to change the way that real estate brokers deliver service to clients. So even though we might not have yet scaled that mountain, no one else is even set up at the base camp.

Our best wishes to all of you for your continued growth and success.

1. When someone asks how you’re doing, say “I’m Great!”

Don’t say “I’m okay” or “I’m fine.” When you meet someone and they ask you how you’re doing, say “I’m GREAT!” Why? First, because it’s just more interesting, and you’re in the business of being interesting to other people. Second, you might just start a conversation, and you’re in the business of starting conversations! And then third, it’s just a better way to go about your day, and you might just persuade yourself to be in a better mood.

2. All that stuff you don’t like to do is why they pay you.

Keep a positive attitude about your job, even when it gets tough. Most of all, don’t complain. No one cares. So no whining about complex disclosures, or difficult clients, or the occasional drudgery that’s part of any job. It’s not interesting, and it’s not appealing. If managing real estate transactions was a really easy job, then people wouldn’t have to pay us to do it!

3. Buildings built without blueprints fall down a lot.

Buildings have blueprints. Surgeons follow “safe surgery checklists.” Pilots follow “flight plans.” At BHG Rand, we have “Project Plans” that identify all the best practices you should follow to manage your business. Follow them. They make your job easier, create consistency in execution, and keep you from making errors. There’s still plenty of room for creativity. But if you don’t follow the Project Plans, you’re going to make mistakes, and mistakes are bad for business.

4. Important tasks go on a schedule, not a “to do” list.

To do lists are great when you’re listing a bunch of small items that you need to complete that day. But they’re not appropriate for major or difficult tasks like ongoing client communication or lead generation. Those things go on a schedule, as appointments with yourself that you need to keep. So if you’re supposed to do some lead generation at 4:00PM and it’s 3:55PM, stop what you’re doing and get to work. Why? Because it’s on your schedule!

5. Any plan is better than no plan.All diets work, at least in the short term. All self-improvement plans work, at least for a while. Why? Because when you set up a plan, you create a system to track and monitor what you do. And anytime you keep track of what you’re doing all day, you’re bound to be more productive than if you just “wing it.” So set up a plan. Any plan. It’s better than the alternative.

6. Wednesday is the enemy of all diets.We’ve all started a diet or a self-improvement plan, had a good couple of days, and then fell off the wagon. The key is to get back on. Stop trying to be perfect, stop feeling that if you break a “streak” that you should just start over on Monday. Every day is a new chance. Try to follow your new plan more days than you don’t. Win more days than you lose. Win more weeks than you lose. Don’t let one bad day throw you off course.

7. Better a holiday than a “hollow day.”A hollow day is one where you spend the whole day at the office, but accomplish nothing to (1) generate new business, (2) service existing clients, or (3) learn something. Those three things are work. If you don’t do any of those three things in a day, then your day was hollow. And if you’re going to spend the whole day at the office getting nothing but busy work done, then you’re better off just taking the day off. Take a day off! You work hard, you deserve it.

8. Never talk to another real estate agent for more than five minutes.

All real estate agents have one thing in common: they’re never going to buy or sell a home with you. So don’t spend all day talking to them. Don’t get sucked into long coffee klatches at work. Don’t let agents yammer on about an inspection for an hour. Five minutes. That’s it. Anything more than that is no longer a work call, you’re just indulging yourself. So when you get on the phone, use this gambit: “I only have a few minutes, but I wanted to call…” It will give you permission to get off the call in a few minutes, and let’s the other person know you’re not going to talk their ear off, either.

9. Spend five minutes organizing your day, or you’ll waste much more time.

Every day, take five minutes to set out your goals, your tasks, and your schedule for the day. Just going through the exercise will help focus you for the rest of the day. After all, even if you’re just writing it on a blank piece of paper, that’s a plan! And any plan is better than no plan.

10. Self-improvement plans fail for two reasons: because they work, or be-cause they don’t.

We’ve all started self-improvement plans, either new lead generation campaigns or diets. And if they don’t show immediate results, we’re likely to abandon them, which is silly because any change requires a long-term commitment. But what if they work? Unfortunately, sometimes we abandon those campaigns as well, because we convince ourselves that “it’s so easy, I can do this ANYTIME!” So even though we lost a few pounds, we stop the diet because we figure we can turn it back on whenever we need it. And then we don’t. So don’t stop your new productivity campaign, even if it works!

The Productivity MakeoverHow can you increase your personal productivity?

Here are ten tips for personal business management, and advice for not just setting goals, but reaching goals.

Ten Productivity RulesHere are ten rules you can follow to increase your personal productivity:

How to Set Goals That You’ll Actually Reach!Setting goals is important. But it’s not enough.

We’ve all become too reliant on the power of setting goals to change our behavior. All these trainers telling us to write down our goals every day and post them on our mirror. All these people who read The Secret and set up their dream boards convinced that the universe is going to send them a lottery ticket.

Now, goal-setting is an important part of making significant changes in our life, since the very act of sitting down and writing out a goal tends to focus the mind on what you want to accomplish. That famous “law of attraction” is really just a way of saying that our thoughts tend to affect our behavior: the more we think about the goal we want to achieve, the more we’re likely to act in a way that will help us achieve it.

The problem is not that people set goals, it’s that they ONLY set goals. Then they just sit back, keep doing things exactly the way they always have, and just wait for good things to happen.

But you have to do more than just write down a goal – you have to actually identify the steps that will help you achieve that goal. For example, let’s say that your goal is to lose 25 pounds.

• Goal: Lose 25 pounds.

Go ahead and write that down on your bedroom mirror all you want, you’re not going to lose 25 pounds unless you take the specific steps that will make changes to your diet and exercise routine. Here are some sample steps you could take:

• Step 1: Cut out all bread and pasta.• Step 2: Eat a hearty breakfast every morning.• Step 3: Go to the gym three times a week.

So now you not only have the goal, but you’ve identified the way you’re going to achieve that goal.

But you’re not yet done. Even identifying the steps you want to take is not enough to help you achieve your goals. You know why? Because the steps you’ve identified are probably things that you’ve tried to do before, and you’ve failed. This probably isn’t your first attempt to lose weight, and in your previous attempts you might have laid out the steps you were going to take to achieve your goals. Maybe you tried to eat breakfast every morning, or go to the gym more, but you got busy and dropped out.

In other words, you have “blocks” that are keeping you, and have always kept you, from taking the steps you need to achieve your goals. So it’s not enough to set goals, and it’s not even enough to identify the steps that will help you achieve the goals. The key to achieving the results you want is to go to the deeper level of identifying the obstacles, those blocks, that keep you from taking the steps to achieve your goal.

Thus, if you eliminate the blocks, you’ll then take the steps and increase the chances of reaching your goals.

Going back to our weight-loss example, we identified three steps that would help you lose weight. Now, let’s add some sample obstacles that might keep you from taking those steps:

Okay, now we’re getting somewhere. We have our goal, we have our steps, and now we have the blocks that we think are likely to prevent us from taking those steps.

Now comes the final part: identifying the solutions to the obstacles, which are the “blockbusters” that are going to break through those blocks and let us take the steps to achieve our goals.

You see how the system works? Maybe those solutions don’t work for you. That’s fine. Find a solution that does.

The key is to keep breaking down the goal into steps, then into blocks, then into blockbusting solutions, remembering the following:

• If you find a blockbuster to the block, you’ll overcome the block.

• If you overcome the block, you’ll take the step.• If you take the step, you’ll achieve the goal.

The problem most of us have is that we write down the goals, and then never actually figure out the steps. And even if we figure out the steps, we never actually identify the block to taking those steps. And, finally, even if we identify the blocks, we never come up with the way to break through those obstacles. That’s why most diets, and most self-improvement programs, fail.

It’s not easy. You still need to be committed, you still need the will power to succeed, you still have the same challenges you always had for achieving your goals. All I’m giving you is a process, but it’s a process that will give you a much better chance of achieving your goals than simply writing them down and wishing that they come true.

Step BlockCut out all bread and pasta I love pasta.

Eat a hearty breakfast every morning. I’m always rushing.

Go to the gym three times a week. I never have the time.

Block BlockbusterI love pasta. Convert to healthier pastas, or save

it for a once-a-week treat.

I’m always rushing. Make your breakfast at night: cut up fruit and ziplock it.

I never have the time. Schedule workouts like you schedule your listing appointments – and keep them.

We spend too much time in the real estate business talking about technology. We treat it like it’s something special, like it’s mysterious and wondrous. It’s not. Technology is just a tool that we use in our business. After all, at one point in our history, the fax machine was an amazing and unfathomable invention. And the first cell phones completely changed the way we work. Those technologies seem simple now, but only because we got used to them. There was a time, you might remember, when people couldn’t figure out how to use those fax machines.

The technology gets more complicated, of course, as time goes on. The internet. Social media. Smartphones. Computers. Tablets. These technologies are incredibly useful, but the more advanced they become, the more effort it takes to keep up. But the effort is worth it. Some of these technologies can make your life easier, not harder, by allowing you to do things more efficiently, cheaply, or quickly. Those are the ones you need to know how to use.

At the same time, you can’t be seduced by technology into thinking that it can do your work for you. We’ve all seen agents sucked into the vortex of shiny new things, wasting all their time blogging and posting on Facebook rather than doing the actual work that goes into helping people buy and sell homes. They think they’re getting something done, but at the end of the day they just played online. They didn’t actually work.

The bottom line is simple: technology is a tool that you need to know how to use. If you don’t know how to use it, you’re not doing the best job you could for your clients, and you’re not giving yourself the best chance to be a really successful agent.

So stop being intimidated by new technologies. Learn how to use them, not for their own sake, but so that you can figure out how they can help you do your job.

The Technology Makeover

Don’t be a “Realtosaurus” afraid of technology. Technology is just a tool, just like any

other tool, and you need to know how to use it in your business. Here are some tips on

using technology more effectively, including a guide to setting up your online presence

and a list of apps that can help you manage your life and business.

If you want to be a professional real estate agent, you need to look the part. Obviously, that includes the way you dress, the way you talk, and the way you conduct yourself in your business. But it also includes the way you present yourself online, because people are increasingly using the internet as an investigatory and vetting tool. They do Google searches before making a date, they look for reviews of restaurants and books before they make a purchase, and they do some due diligence before hiring a real estate agent.

So what are they going to find if they look you up? Are they going to find you? Are they going to find the information that YOU want out there about yourself. If not, you need to aggressively set up your online profiles to establish your professional credentials. Even if you’re not the most “techie” of agents, you can still establish a professional online presence with just a few simple steps.

Here’s why you need a strong online profile:

1. People can find you. The more you establish yourself online, the easier it is for people to look you up. You really want to control that first page of Google, so that anyone searching for you finds the links you want.

2. You look more professional. When people do find you online, you want them seeing a nice picture, an informative profile that references your area of expertise, and your contact information. That’s what you want prospective clients to find when they look you up.

3. Control and maintain your online reputation. Controlling that first page of Google is also a defensive maneuver, designed to bury any negative

or frivolous information that might otherwise pop up.

4. Build relations. Your online presence allows you to establish connections to your sphere, and to potential clients. And if you start “publishing” through your online portals, you’re even providing a simple and cost-effective service to them.

5. It’s advertising! Basically, an online profile is an advertisement for your services, placed for free on any number of high-traffic sites. You don’t need to have an office in Richtown if you have an online presence that describes you as an expert on Richtown real estate. That’s how you generate online leads.

How to Build Your Online Marketing Presence

Rand’s Rules on Technology

1. Embrace technologies that help you do something you were already doing, but do it faster, better, or more efficiently.

2. Avoid technologies that seduce you into doing something that you had never done before.

3. Remember that personal communication requires an ACTUAL PERSON doing the communicating.

4. Use communication technology to inform, not annoy.

5. Remember that technology is just a tool of the trade – and you need to know how to use it.

Where You Need to Be Online

If you want step-by-step instructions for setting up each of these profiles, go to the How2 blog posts available at www.randagent.com.

Here are the places where you need to have a professional profile. Some are social

media sites, some are business sites, and some are specific to real estate. It will take

you all of an hour to get your profile and picture set up on the site.

Better Homes and Gardens Rand Realty Personal Website

Yelp Personal Account

Trulia Profile

Better Homes and GardensReal Estate Personal Website

Yelp Business Profile

Zillow Profile

Google Plus

LinkedIn Profile

Facebook Personal Page Facebook Business Page

How to Leverage Your Online Presence (for Free!)

1. Publish to your Facebook business page. When you create a Facebook business page, create it as “[TOWN] Real Estate Information, from Jane Smith of Better Homes and Gardens Rand Realty.” Don’t make it “Jane Smith, Realtor!” because no one is really interested in that. People are more likely to “like” your page if it’s about real estate itself, rather than just about you. And then once it’s set up, gather good information about real estate and your local area from the internet, and publish it to your Facebook business page. That’s great for SEO, because it attaches your name to real estate. It’s also a terrific way to impress clients and potential prospects, because it shows professional engagement, and it actually provides them with a service of keeping them informed about what’s going on in real estate.

Where do you get the information?

• Google Alert. Set up a google alert (just google the term “google alert” to find the tool) for your local area: “[town] real estate.” Once you have the alert set up, you can get emails every day, or every week, containing any new links that contain those search terms. If they’re interesting articles about the area, then you can just republish the links to your Facebook page.

• Twitter Feed. Don’t use Twitter to send out messages, use it as a news feed by following people in real estate who post interesting articles that you can then broadcast from your Facebook page. Whom do you follow? Go look at @josephrand and see who I’m following. You can just follow the same people I’m following.

And, of course, whenever you publish to your Facebook business page, you should then “share” that post on your personal Facebook account. That way, you get a double-hit on the article.

2. Get Likes, Endorsements, ReviewsOnce you’ve set up your profile, you want to solicit as big a network as you can. Get people to “like” your business page by liking theirs and making requests whenever you interact with them. Don’t be annoying, but make the request.

Similarly, ask your existing clients if they would write a review of your work on Trulia, Zillow, Realtor.com, Yelp, or Linkedin. Most online reviews are bogus, but they do show a certain amount of commitment. Ask once, and ask nicely, but if they don’t do it try not to bug them about it.

3. Answer Questions on Online ForumsOne way to build up your online presence is to answer questions on Trulia Voices or services like Quora.com. Don’t do it because you want to try to convert the questioner into a client. That’s a fool’s errand. Do it because when people look up your profile, they’ll see that you’ve been helpful answering questions – and hopefully writing smart things!

Don’t spend more than a few minutes a week doing this, but even if you answer one question a week for five minutes, at the end of the year you’ll have over 50 answers on Trulia Voices or Quora. That’s pretty good, because that information stays online forever.

Rand’s Rules for Facebook

1. Don’t annoy people. Post information that they’ll find interesting. If you feel like you want to promote your listings, post a picture that shows off the kitchen or view or living room design or whatever.

2. Spend 90% of your time listening, and 10% talking.

3. LIKE LIKE LIKE LIKE LIKE as much as possible.

4. Don’t post inappropriate material: politics, off-color humor.

5. For your business page, make it about a niche, not about you.

6. Separate out your business posts to your business page, then selectively “share” them on your personal page.

7. Key marketing point: post congratulatory message to your client’s pages.

8. When you friend someone you don’t know very well, send them a short note about who you are.

9. Be disciplined about creating groups on Facebook to selectively make posts.

10. “Like” all the company pages!

Your pen is a tool. Your name badge is a tool. Your car is a tool. All these things you use in your business – they’re just tools. So stop thinking about “technology” as if it’s anything more than just a set of tools that you need to use if you want to be a successful real estate agent. You wouldn’t want to go to a doctor who still used leeches, would you? So why should a client work with an agent who doesn’t know how to use some basic “tools of the trade?”

Here’s a list of the fundamental tools that you need to be using in your business:

Smartphone. You need a smartphone, one where you can check email, send text messages, surf the web, and use productivity and client management apps. Smartphones are essentially the cheapest “computers” you can buy, and the time has come where every single real estate agent needs to own one.

Mobile Hotspot. You need to be able to set up your own wireless network, which you can do with most smartphones for a small additional monthly fee. Personal hotspots are great, not only for your own productivity but when working with clients. If you’re on a buyer tour, you can hand your client your tablet or laptop and let them look at the homes online while you’re driving. And when you’re on a listing presentation, you can show sellers how your listings look online without having to ask them for their wireless network password. Plus, having a mobile hotspot on your phone means you don’t need to get a laptop or tablet that have cellular data access – because you can use your hotspot to get them online.

Laptop. You need your own computing device. If you don’t yet have a computer of your own, we recommend a laptop because of

its versatility. If you do have your own computer, though, you can decide whether to get either a laptop or a tablet – but you need one or the other. Good laptops are about $500, and will last you three or four years if all you’re looking to do is get email, surf the web, access MLS, and use Randcenter tools.

Tablet. Tablets are not yet an absolute necessity, but they are getting there. It used to be that they were only good for reading, email, watching videos, or surfing, but all the new productivity apps make tablets something of a laptop replacement. So if you have your own computer, but not yet a laptop, you can consider getting a tablet rather than a laptop for your on-the-go needs. And even if you have a laptop and a computer, think about getting a tablet for presentations and buyer tours. Plus, they’re great devices that you’ll find yourself using all the time.

Camera. If you’re a real estate agent, then like it or not you are a professional photographer. And a professional photographer can’t walk around taking pictures with some $100 point-and-shoot that she got at Costco. You need a real camera, one with a wide-angle lens and a good sensor. Good ones can run you no more than $300, and only up to $500 if you want a fancy model with interchangeable lenses.

These tools are no longer luxuries. They’re necessities in today’s business. And you can get yourself fully outfitted with all of these tools for under $1,000 if you buy smart.

If you want some buying advice, check out the 2013 Rand Technology Buying Guide for Real Estate Agents on the RandAgent.com blog.

The Tools of the Trade

Google Calendar A great way to keep your calendar. Easy to add new appointments, and to share appointments with your clients. Syncs across all types of platforms.

Google DocsReplaces your Microsoft Office programs: word processing, spreadsheets, presentations. Because it keeps all your documents in the cloud, available to you whenever you are connected to the internet. Also, easy to share documents via email. And free, which is cheaper than Office!

Google Voice Transcribes your voicemail and emails it and/or texts it to you. Great to have all your voicemail saved in your email inbox. Lets you check your voicemail without having to call in.

Picasa Web Albums Great way to store your photos, so they don’t clog up your computer, and so they are available from anywhere that’s internet-connected. Also great for sharing photos with clients.

Picasa Desktop Great way to enhance your photos, crop them, edit them, etc. Works nicely with the web albums so you can move photos easily from one place to the other.

DropboxGreat way to store large files so you can share them with your clients, or to backup your important files so you don’t lose them. Also, easy to move files from one place to the other. Also a good way to move photos from one computer to another.

Evernote Great way to take notes that will be available across platforms, and to store documents and photos.

Google Maps Great mapping program, can get turn by turn directions, and reliable.

Orchestra Great way to keep track of “to do” lists, manage projects, share tasks. You can even dictate your “to do” list.

Card Munch Hold a business card up to phone, take picture, and it uploads information into Contacts.

Genius Scan Scan documents as PDFs that you can mail, store, etc.

Sly Dial Leaves someone a voicemail without ringing their mobile phone. Great if you want to avoid talking to someone. Doesn’t show up as a missed call.

Branded Realtor.com

Great agent branding on a terrific app, and forges a connection between you and your client: you can suggest listings to the client, and she can request showings from you. Just Google “realtor.com collaborate” to get directions.

Open Home Pro Manages your open house for you by giving you an iPad-based sign-in sheet, which then stores visitor information and sends requests for follow up. Very nifty!

Magic Plan The best app available to create floor plans for your listings. Still not that easy to use, but getting better.

Videolicious Great for making on-the-spot video tours of listings, or even to create a cool email video message.

Online Tools of the Trade: Must-Have Apps and Web Services

Smartphones and tablets and cameras aren’t your only “tools of the trade.” Here is a list of great apps and web-based services that you should be using in your business. Go to RandAgent.com to find the links to all these sites.

Online Tools of the Trade: Must-Have Apps and Web Services

Great businesses depend on great systems that deliver an outstanding service experience to customers and clients. McDonalds has a great system for preparing food, which is why the fries taste the same no matter where you go. Disneyworld has a great system for trash management, which is why you never see trash on the streets of Tomorrowland.” Nordstroms has a great system for handling returns, which is why it’s known for having the best customer service in the retail industry. Starbucks has a great system for restocking the cream-and-sugar stations, which is why you rarely have to ask them for milk or sweetener.

What do great systems have in common?

First, great systems codify best practices. If you’re going to establish a system for managing your business, you best be sure that your system articulates the ideal standards that you want to follow. After all, there’s no point to establishing a system that enforces mediocrity. So great systems identify the best practices in the industry, the best ways to do things, and then standardizes them into a series of rules, policies, protocols, or methods. For example, McDonalds operators know the best way to make the fries, so they’ve established a set of procedures that ensure the fries are prepared that way every single time.

Second, great systems are automatic. The best systems are automatic – once you put them in place, they generate the results you want just by their very nature. For example, legend

has it that Walt Disney himself declared that the trash cans at Disneyworld should be no more than 25 paces apart, which is what he determined was the maximum distance people would walk with trash in their hand before dropping it on the ground. Similarly, Starbucks employees are trained to do a “sweep” every fifteen minutes to clean and restock the cream and sugar station. Why so often? Because if you automatically clean that station every fifteen minutes, it never gets dirty. And if you automatically restock the sugar every fifteen minutes, you never run out.

Third, great systems are efficient. Best practice systems do you no good if they’re too complex or difficult to follow. You need clear rules that don’t require a lot of interpretation, and protocols that can be applied without unnecessary complications. The whole idea of establishing a system is to eliminate unnecessary steps in your business processes, to do things more quickly, cheaply, and easily. For example, McDonalds’ and Starbucks’ food preparation steps are obviously simple enough that part-time teenage workers can follow them. Nordstroms streamlines returns by enforcing the clear rule that everything is returnable, so that employees don’t even have to think about whether the customer is taking advantage of them.

Finally, great systems are enforced. Collections of best practices do you no good if you don’t actually follow them. The hallmark of great companies is consistency in execution. You

The CORE Project that we started almost five years ago is now complete. We now

have a full array of CORE tools, programs, and resources to help you manage your

clients, generate new business, and make buyer and seller presentations. Now

comes the easy part – learning how to use those tools in your business.

need to do the same thing the same way every single time. The fries and coffee always taste the same. The stores always look the same. You can’t accomplish that type of consistency without a great system, and even then it’s not easy. But if the system if efficient and automatic, then executing the system comes naturally. And if the system articulates the best practices you want to follow, then the end result of that execution is going to be an outstanding customer or client experience. Which brings us to real estate. Has anyone in the real estate industry created a great system for delivering an outstanding service experience to clients? Not really. The industry spends all its time trying to create innovative ways to “sell” clients, not to service them. All our training, for example, is dedicated to new and creative ways to “prospect” for clients, not innovating best practices for servicing their needs.

Well, that’s what we’ve been trying to do at Better Homes and Gardens Rand Realty for the past five years – to create a better system of real estate brokerage. We believe that if we can provide our agents with a better way of servicing their clients, we can help them build a better and more sustainable business. We look out on the industry and don’t see any company, or any franchise system, that is even trying to innovate the way we deliver services to clients. No one has built a brand like Nordstrom, or Disney, or Starbucks, or the Four Seasons – a brand known for the the qualify of the services provided.

That’s what we’re trying to do with our philosophy of Client-Oriented Real Estate (“CORE”), built around the idea of identifying what a client needs, creating innovative systems to satisfy those needs, and consistently executing on those systems. We launched the CORE concept almost five years ago, in a series of company-wide seminars where we asked and tried to answer the question “How can we help our agents become the world’s best real estate agent?” From those first seminars, we have innovated a series of tools, programs, and resources that now make up the “CORE System.”

CORE is one of the great differentiators for Better Homes and Gardens Rand Realty. Every real estate company pays “lip service” to providing great service. But we’re the only company that has actually created systems that when used effectively can actually ensure a consistent, quality experience for our clients. You can’t just say you’re going to “give great service.” You need a system, a plan, a set of procedures designed to generate a great client experience.

For example, consider how the CORE systems we have created follow the principles of great systems:

3 Quality. Many of the CORE systems are designed to articulate the best practices of the company, including the checklists that are part of the CORE Project Plans and the Consultation Guides that nudge you toward asking questions rather than making a stock presentation.

3 Automaticity. The CORE systems are set to automatically generate great service whenever possible. Think of all the email alert systems we have created to generate automatic communications between you and your client – the buyer alerts from randrealty.com, and the weekly seller updates. Or consider the Disclosure Packets, which were created to automatically generate your signed copies while providing proof that the clients received their copies.

3 Efficiency. Whenever possible, we’ve tried to create systems that simplify your life. The Realtor for Life program, for example, is designed to eliminate your need to go out and buy stamps and envelopes, which would tend to slow you down or result in you not actually sending the mailing out. And virtually all the Randcenter tools are designed with usability in mind.

The CORE System is now complete. We have now finalized the full array of programs you need to become a great real estate agent by providing a better service to your clients, generating new business through a service-oriented perspective, and giving consultative presentations to both buyers and sellers. We believe that CORE provides a better way to build and manage your business, and that it is going to slowly become part of our company “DNA,” the foundation of what makes Better Homes and Gardens Rand Realty different from -- and better than -- other real estate companies.

Client Presentation Systems

Presentation FoldersA marketing and services “pitch” to buyer and seller clients, organized around the points of differentiation you can make, and a place to hold all the other documents you’ll be presenting at the meeting. For sellers, we have the “New Solutions” folder. For buyers, we have the “Better” folder.

For the first time, we now have a full array of CORE materials

for both your seller and your buyer presentations.

Buying Real Estate

Buyer ConsultationGuide

With Buyer Project Plans

What You Need at Your Initial Appointment

o Blue Buyer Folder (for your copies to take back)

o This Buyer Consultation Guide

o Buyer Disclosure Forms Packet

o Blue EPA Lead Paint Disclosure Booklet

o Buyer Orientation Guide Hard Copy

o The “Better” Buyer Proposal Folder

o Quarterly Market Report

o Local Market Report (if not in Buyer Tour)

o Seasonal Event Guide

o Buyer Tour Customized for Showings

GeNerAl:

Name

Owner Name:

Mobile Phone:

Email:

requIremeNts

Area (s):

Moving Date:

Price Range:

Home Size:

Seller ConsultationGuide

With Seller New Listing Project Plans

What You Need at Initial Consultationo New Solutions Presentation Folder

o Comparative Market Analysis

o Selling with Better Homes and Gardens Rand Realty Disclosure Packet

GENERAL:Property AddressOwner NameOwner Contact Phone(s)Owner Contact Email(s)

Owner Contact Address (if different from Property)

PROPERTYTotal # of Rooms

Property Type/Style

Number of Bedrooms

Construction Style

Number of Full Baths

Year Built

Number of Half-Baths

Siding

Living Room

Driveway

Dining Room

Heat Type

Family Room

Fuel Type

Den/Study

Water Type

Other rooms?

Sewer

Attic

Air Conditioning

Basement

Electric

Garage

Acreage

DID OWNER PROVIDE:Average Monthly Utilities

Did Owner Provide Utility Bill?

Yearly Property Taxes

Did Owner Provide Tax Bill?

Do Taxes Reflect Exemptions?

Did Owner Provide Survey?

Has Owner Renovated Home?

Did Owner Provide Deed?

Did Owner Provide C/O for work?

Did Owner Provide Keys?

FOR CONDOSContact Number for Managing Agent

Monthly HOA Fees

Get a copy of the Buyer Orientation Guide to read at your convenience.

Have your initial consultation with your buyer agent.

Review and complete your legal disclosures and agreements.

Review with your agent “What Are You Looking for in a New Home?”

Get a prequalification letter from Hudson United Mortgage.

Start saving your bank statements and pay stubs for your mortgage application.

Register with randrealty.com

Set up saved searches on randrealty.com.

Add “@randrealty.com” to your “safe senders” list.

Set up a folder on your email account for your randrealty.com email.

Save the randrealty.com web app to your smartphone.

Set up a showing schedule with your agent.

Communicate regularly with your agent.

Review your randrealty.com email updates regularly.

Get printouts of all show sheets.

Set up file folders for your show sheets (low-tech).

Set up a spreadsheet to track your showings (high tech).

Review all offers submitted by your agent.

Order preliminary lien searches from Hudson Abstract for any offers you make.

Get recommendations from your agent for your transaction professionals.

Contact your attorney about reviewing the contract of sale.

Attend the home inspection.

Review the home inspection report with your agent and attorney.

Review issues in the contract with your attorney.

Sign contracts of sale with your attorney.

Complete your mortgage application with your Hudson United Mortgage rep.

Submit all your mortgage documentation.

Respond to all mortgage documentation requests promptly.

Order or have your attorney order a title report from Hudson Abstract.

Discuss any title issues with your attorney.

Contact your Hudson United Insurance rep to quote your home insurance.

Get estimate of closing costs from your attorney.

Get closing date from your attorney.

Contact movers for estimates of the cost of your move.

Hire a mover and schedule the move.

Schedule and attend the walkthrough with your agent.

Discuss any walkthrough issues with your attorney.

Attend the closing, bringing proof of identification and your checkbook.

Finalize all transaction documents at the closing.

CORE Buyer Checklist

In the same way that your agent uses the CORE Project Plans to identify “to do” items and ensure attention to detail, we’ve prepared a “Home

Buyer Checklist” that you can review from your initial consultation to your closing. You can keep this checklist throughout your transactional

process to remind you of “to do” items you need to complete to get to your closing table.

transactional Project Plan: transaction, Closing

Pre-transaction Project Plan: Consultation, Preparation, search

CRITERIA

YES NO

Is the exterior main entrance clean, well-lit, and free of clutter?

Is the main interior entrance clean, well-lit, and free of clutter?

Is the main interior entrance floor polished, and/or the rugs spotless?

Are the living areas free of clutter: magazines, knick-knacks, etc.?

Are the living areas appropriately de-personalized?

Are the closets open and airy, not stuffed with coats and storage items?

Are the countertops clear of clutter?

Do the bookshelves have open spaces, free of clutter?

Are the living area floors clean, and/or the rugs spotless?

Do the living areas have an appropriate amount of furniture to make them roomy?

Do all the bedrooms have beds with bedding?

Are the bedroom closets filled with only the “vacation-plus” wardrobe?

Are the bedroom nightstands free of clutter?

Do the bookshelves have open spaces, free of clutter?

Are the bedrooms appropriately de-personalized?

Are the kitchen appliances clean and polished?

Is the refrigerator free of magnet clutter?

Are the under-cabinets free of clutter and old rags, bottles, etc.?

Are the kitchen floors clean and polished?

Do the kitchen cabinets look roomy, clear of extra plates and clutter?

Are the kitchen cabinets clear of unnecessary cooking items?

Are the countertops clean and free of clutter?

Is the refrigerator clean and cleared out of unnecessary items?

Is the entire home cleaned like a “model home”?

Are all the windows clean, with appropriate window coverings?

Is the garage clean and free of clutter, such that cars can fit in it?

Do all the light fixtures have bulbs?

Do the light fixtures all work?Do all the plugs work?Do the garage door openers work?

Does the doorbell work?Are the walls free of marks, holes, and other distractions?

Are all the walls appealingly painted?

Do the walls have an appropriate amount of wall displays (i.e., pictures)?

Does the property have curb appeal?

Do the lawn, shrubs, and other plantings display well?

Is the fencing clean and in good shape?

Is the yard furniture in good shape?

Home Detailing ChecklistTo Be Filled Out By The Agent

Seller Orientation Guide

1. Better Homes and Gardens Real Estate | RAND REALTYwww.RandRealty.com


ConsultationMarketing

PreparationContract Closing


www.RandRealty.com

Welcome toBetter Homes and Gardens

Rand Realty

EXCLUSIVE REPRESENTATION DOCUMENTATION PACKET

Thank you for giving Better Homes and Gardens Real Estate Rand Realty an opportunity to represent you. We know

that buying a home is a significant event in your life, and we are honored that you have chosen to work with us. Every

agent at Rand is licensed in the State of New York and a member of the National Association of REAlToRS®, abiding by

its professional Code of Ethics.

To help you prepare for the home-purchasing process, we have assembled all the documents necessary to advise you of

your legal rights and responsibilities and to assist you through the process. Some of these documents need to be signed

and retained by your agent, and others should be kept by you throughout the purchasing process. Please review and

complete these documents carefully with your licensed Better Homes and Gardens Rand Realty sales professional:

Buying Real Estate

www.randrealty.com

DOCUMENT

EXPLANATION

Quality Service Guarantee Our guarantee of the services your agent will perform for you.

New York State Agency

Disclosure Form

Required by New York State to acknowledge our disclosure of our agency relationship

with you.

Right to Represent

AgreementRequired by the REALTOR® Code of Ethics to set our mutual rights and obligations.

Affiliated Business

Arrangement Disclosure

Required by federal law to ensure our disclosure of our relationship with affiliated

settlement service businesses.

Hudson Abstract

Title Insurance ApplicationAn application for title insurance.

Hudson Group Home

Insurance InformationInformation on home insurance services.

Hudson United Mortgage

Pre-Approval ApplicationAn application to be pre-approved for a loan.

Home Warranty ApplicationAn application for a home warranty provided by Better Homes and Gardens

Home Protection Plan.

“Agency Relationships in

Buying and Selling a Home”Required by New York State to explain our agency relationship with you.

Disclosure Packet Checklist A list to help ensure all of your questions are answered and required forms are completed.

With Better Homes and Gardens® Rand Realty

Thank you for giving Better Homes and Gardens® Rand Realty an opportunity to represent you. We know that selling your home is a significant

event in your life, and we are honored that you have chosen to work with us. Every agent at Rand is licensed in the State of New York and a

member of the National Association of REAlToRS®, abiding by its professional Code of Ethics.

This packet contains all the documents necessary to get your home on the market and to advise you of your rights as our client. Some of the

documents are perforated so that your agent can tear them out to keep a copy for our files. The others are bound in the packet so that you

always have copies. Please review and complete these documents carefully with your licensed Rand Realty sales professional, and keep this

packet throughout the home-selling process. Thank you again for giving us the opportunity to represent you.

Selling Real Estate

www.randrealty.com

Document

explanation

Quality Service Guaranteeour guarantee of the services your agent will perform for you.

new York State agency Disclosure Form

Required by New York State law to acknowledge our disclosure of our agency relationship with you.

exclusive Right to Sell listing agreement

Required by the REAlToR® Code of Ethics to set our mutual rights and obligations.

Seller’s Disclosure of information

on lead-Based paint Required by federal law to ensure your disclosure of any lead paint information if the home was built

before 1978.Seller’s notice of

Well-testing obligation. Required by county law in Westchester and Rockland to ensure disclosure of well-water testing if your

home gets drinking water through wells.

preparation time Rider

to exclusive Right to Represent An addendum to our Exclusive Right to Sell if you need time to prepare your home for sale.

outgoing Buyer Referral A form to ensure you are referred to an experienced real estate professional if you are moving

out of the market area.

Home Warranty applicationAn application for a home warranty.

epa lead-Based paint “Fact Sheet” Required by federal law to provide information about lead-based paint hazards.

property condition Disclosure Statement Required by New York State law to provide disclosure of property condition to buyers.

affiliated Serviceslist of affiliated businesses and their services.

“agency Relationships in Buying and Selling a Home” Required by New York State to explain our agency relationship with you.

Rand Disclosure Packet Version 2012.9

with Better Homes and Gardens® Rand Realty

Documentation pacKet

Disclosure PacketsA professional packet of disclosure materials with perforated copies for you and bound copies for your client, and a great way to make a strong first impression.

Orientation GuidesA comprehensive overview of the buying and selling process that you can send via email before your meeting to educate the client about our service offerings and pre-sell that client on working with the company.

Consultation GuidesA guideline for your consultative presentation, with a list of suggested questions and ample space to take notes, providing a professional way to consult with your potential clients.

Email Orientation Guide: Stage Three to seller, confirming that listing is on the market.

Schedule first open house.

Schedule broker’s open house.

Make appointment with seller in calendar for 30-day review of listing.

Listing Maintenance Project Plan

Note that this Project Plan does not include ongoing marketing activities such as periodic open houses,

direct mail, or other types of active marketing.

Review Monday Seller Update email for property traffic and market update.

Set weekly phone appointment to discuss updates with seller.

Get feedback from buyers and agents, and give prompt feedback on all showings.

Send seller interesting article links: GWM articles, R4L mailings, other sources.

Check that listing information is correct on randrealty.com and syndicated sites.

Perform a Simple CMA (three pager) with update on the market.

Set appointment to sit down with client to review CMA, market, feedback, pricing.

Review condition of staging and detailing.

Change order of photos.

Repeat 30 Day Mark Items.

Take new photos to represent the change of seasons.

Re-write property description for MLS and enhanced description for Randcenter.

Create a new full CMA to update client on the market.

Set appointment to sit down with client to review CMA, market, feedback, pricing.

Get extension of current listing, or a new listing agreement.

Email Seller Orientation Guide: Stage Four to seller.

If a Rand buyer, make dual agency disclosure and get signed acknowledgement.

Require written offer and buyer’s pre-approval with reputable lender.

Put a copy of the offer sheet in the file (including rejected offers).

Write up or review Purchase Offer or Memo of Understanding.

Assist seller in choosing an experienced, local real estate attorney.

Submit Purchase Offer or Memo of Understanding to attorney.

Schedule and attend inspection (if possible), and review results with seller.

Assist attorneys in obtaining documents for contract.

Email Seller Orientation Guide: Stage Five to seller.

Confirm that status is updated in MLS.

Notify admin and manager of the open transaction, provide documentation for file.

Review CDA and bill to confirm accuracy.

Schedule and attend walkthrough, and resolve any issues.

Attend closing if possible.

After closing, confirm that status is updated in MLS.

For Agent: Buyer Project Plan

Use this project plan from your client consulation through the search process.Set appointment to meet with the client for a half hour consultation.

Email client the Introduction, and Stage One of the Buyer Consultation Guide.

Prepare customized Buyer Tour with all properties for the showing and Local Market Report.

Prepare “Better” Buyer Proposal by inserting Disclosure Forms Packet, Orientation Guide,

Quarterly Market Report, Seasonal Event Guide, Buyer Tour.

Preview houses on tour if possible.Fill out grid on Buyer Consultation Guide with all information you already have.

Review Buyer Consultation Guide with client: ask questions, have a conversation.

Have buyer sign disclosures and agreements in the Buyer Disclosure Forms Packet.

Put agent copies of Buyer Packet documentation in blue folder and save.

Give Buyer the blue EPA Lead Testing booklet.

Fill out Hudson United Mortgage pre-approval application form, and send to loan officer (or

just call loan officer with information).Give client the Buyer Orientation Guide, QMR, Event Guide.

Give client Buyer Tour and review homes you will be seeing on showing.

Set client up on randrealty.com and select you as the client’s agent.

Show client how to use randrealty.com and set up saved searches for client to get email alerts.

If client is using Realtor.com app, invite client to connect with you on Realtor.com.

Submit signed ERR agreement to office admin to enroll buyer in Agent Intuition.

Review Agent Intuition daily to see if your clients are active on randrealty.com.

Create alerts in MLS to alert you to new properties meeting buyer’s search criteria.

Have at least one weekly phone call with buyer to update on new properties.

Preview all properties before showing whenever possible.

Prepare Buyer Tour for all showings.Get feedback on all showings for listing agents.

Send Rand Quarterly Market Report and Seasonal Event Guide whenever published.

Send Simple CMAs on properties when they are prepared to make offers.

Project PlansContained in the Consultation Guides, a checklist of tasks you need to complete once you start working with that client – and a great demonstration for your client of the CORE concept.

Seller Detailing and Staging Checklist CORE Buyer Transaction Checklist

A perforated checklist at the end of the Consultation Guide that can be given to the client. For sellers, it takes you through a detailing and staging discussion with your client, giving you an opportunity to start servicing that client’s needs right after they sign the listing agreement. For buyers, it’s a transactional checklist of reminders of what they need to do to purchase a home.

% Change

Total

Closed Sales

Average

Selling Price

Median

Selling Price

Average Days

on Market

Total

Listings Taken

% Sale Price/

List Price

Active

Inventory

% Change

TotalClosed Sales

Average

Selling Price

Median

Selling Price

Average Days

on Market

TotalListings Taken

% Sale Price/

List Price

ActiveInventory

Real Estate Market Statistics for

Nyack

All Data Provided by GHVMLS as of 03/08/2013

LOCAL AREA RESULTS

ROCKLAND RESULTS

10/1/2012 to

12/31/201210/1/2011 to

12/31/2011

10/1/2012 to

12/31/201210/1/2011 to

12/31/2011

64

50%349

3267%

$553,083.33 $279,750.00 98%$412,779.52 $401,447.60 3%

$370,500.00 $302,000.00 23%$383,000.00 $370,000.00 4%

236211

12%215

2074%

116

83%418

423-1%

97%103%

-6%96%

93%4%

15n/a

n/a1015

n/an/a

Eric Ortner

Phone: (845) 825-8038

Email: [email protected]

Joseph Rand

Phone: (845) 825-8022

Email: [email protected]

Website: josephrand.randrealty.com

Properties Currently For Sale8 Hamilton Place

This home is located on a dead end street yet close to parkways and thruway. it is tied into the well established community and has

been in the owners family for years. This is a 2 bedroom but usable room in walk up attic. It does need some work.

List Price: $199,900.00List$ Sq. Ft.: $155.32

Taxes: $10,067.00

Bedrooms: 2Bathrooms: 1Heating: Forced Air

Fuel: Natural Gas

Air Cond: None

City: Nyack

Post Office: NyackSchool Dist: Nyack

Style: Two Story

Attic: Finished,Walkup

Basement: Walk OutGarage:

Under Home/Ground

Electric: Circuit Breaker

Status: Active

Square Ft.: 1287Acres: 0.08Year Built: 1918DOM:

101

Eric OrtnerPhone: (845) 825-8038Email: [email protected]

Joseph RandPhone: (845) 825-8022Email: [email protected]: josephrand.randrealty.com

Presentation Center CMABuyer Tour CMA

For sellers, we have the standard CMA to give them an idea of the pricing environment for their listing. For buyers, the Buyer Tour with CMA not only gives them information on all the homes you’ll be showing, but also a CMA element to educate them about homes that have sold.

Seller Orientation Guide (all Stages)The Orientation Guides can be sent in stages, or all at once, to educate the seller about the sales process.

Seller Project PlanThe Seller Project Plans guide you through the different tasks you need to complete in order to fully service your seller’s needs.

Listing EnhancementsThe enhancements section of Randcenter allows you to write a much longer and more detailed description of your listings, and to upload up to 30 high-resolution photos that will feed into RandRealty.com and other syndicated real estate sites.

Weekly Seller Update EmailsYour sellers get two weekly updates, a market activity report and a listing traffic report, that provide ongoing communication and updating between you and your client.

Presentation Center FlyersPresentation Center provides you with several ways to create high-quality flyers for market purposes.

Virtual ToursVirtual tour slideshows automatically created for every listing from HV Tours.

PinpointThe BHGRE Greenhouse’s proprietary direct mail program that allows you to demographically target potential buyers for your listings.

Xpress Docs Direct MailOur comprehensive direct mail solution, with dozens of different designs for your marketing needs.

RandRealty.com EnhancementsOur listings are enhanced with high-resolution photos and longer descriptions and featured on search results and property detail pages on one of the highest-traffic real estate sites in the region.

Showing DeskFor offices using Showing Desk, we provide an easy way to set up listing appointments and solicit feedback for your sellers.

Professional PhotographyFor Distinctive Collection homes, or in cases where you want professional marketing, we have Edberg Marketing to provide professional photograph, floorplans, and high-quality marketing materials.

Quarterly Market ReportsTo help educate our sellers, we provide the most in-depth analysis of the regional real estate market.

Local Market ReportsYou can create on-demand customizable local market reports that will give you comprehensive sold data on a local town or village.

Listing VideosThe Enhancement Center allows you an easy way to embed a Youtube video into your listing detail page, and we have forged a relationship with Videolicious to give you a great way to create simple listing videos.

MyPublisher Photo BooksOne of our great innovations: high-quality portfolio photo books you can make for your listings with our partner MyPublisher.

Seller Service Systems

We provide an array of tools that you can use to market your listings and service your seller’s needs.

Buyer Service Systems

Here are some of the CORE service tools available to help you service your buyers.

BHG Rand Orientation GuideOur new Buyer Orientation Guide is a comprehensive overview of the home buying process, and a great way for you to forge a strong connection with your potential buyer clients.

Hudson United Orientation GuideThe Hudson United Orientation Guide provides a thorough explanation of the mortgage, title, and insurance process, and is a great complement to the BHG Rand Buyer Orientation Guide.

Buyer Transaction ChecklistThe Buyer Transaction Checklist in the Buyer Consultation Guide is a great way for your buyer clients to keep track of the tasks they need to complete in buying a home, and a terrific way for you to demonstrate the CORE service ethic.

Buyer Tour with CMAOur new Buyer Tour with CMA allows you not only to create an attractive display of the homes you’re viewing, but also provide a comparative analysis of sold properties.

Email alertsWhen buyers set up saved searches or favorite properties on RandRealty.com, they’ll get email alerts every time

Agent Intuition/Client ConnectOur new system for managing your buyer’s relationship with RandRealty.com gives you a great way to help them set up their searches and keep track of their progress.

Market IntelligenceOur quarterly and local market reports provide excellent in-depth data and analysis of what’s happening in our regional and local real estate markets.

RANDREALTY.COM FEATURES


1. Better Homes and Gardens Real Estate | RAND REALTYwww.RandRealty.com

Buyer Orientation Guide

Preparation Search Transaction

Agent Name Here Sale Agent Title

OFFICE: (732) 513-6807 CELL: (732) [email protected]

For Agent: Buyer Project PlanUse this project plan from your client consulation through the search process.

Set appointment to meet with the client for a half hour consultation.

Email client the Introduction, and Stage One of the Buyer Consultation Guide.

Prepare customized Buyer Tour with all properties for the showing and Local Market Report.

Prepare “Better” Buyer Proposal by inserting Disclosure Forms Packet, Orientation Guide, Quarterly Market Report, Seasonal Event Guide, Buyer Tour.

Preview houses on tour if possible.

Fill out grid on Buyer Consultation Guide with all information you already have.

Review Buyer Consultation Guide with client: ask questions, have a conversation.

Have buyer sign disclosures and agreements in the Buyer Disclosure Forms Packet.

Put agent copies of Buyer Packet documentation in blue folder and save.

Give Buyer the blue EPA Lead Testing booklet.

Fill out Hudson United Mortgage pre-approval application form, and send to loan officer (or just call loan officer with information).

Give client the Buyer Orientation Guide, QMR, Event Guide.

Give client Buyer Tour and review homes you will be seeing on showing.

Set client up on randrealty.com and select you as the client’s agent.

Show client how to use randrealty.com and set up saved searches for client to get email alerts.

If client is using Realtor.com app, invite client to connect with you on Realtor.com.

Submit signed ERR agreement to office admin to enroll buyer in Client Connect.

Review Client Connect daily to see if your clients are active on randrealty.com.

Create alerts in MLS to alert you to new properties meeting buyer’s search criteria.

Have at least one weekly phone call with buyer to update on new properties.

Preview all properties before showing whenever possible.

Prepare Buyer Tour for all showings.

Get feedback on all showings for listing agents.

Send Rand Quarterly Market Report and Seasonal Event Guide whenever published.

Send Simple CMAs on properties when they are prepared to make offers.

Homefinding Guide

Specially Prepared For:Buyer Blah Blah

123 WherevervilleWhoville

Presented by:Eric Ortner & Joseph Rand

Better Homes and Gardens Rand Realty10 Schriever Ln

New City, NY 10956

Tel: (845) 825-8038

Date:March 08, 2013

© 2013 Better Homes and Gardens Rand Realty Equal Housing Opportunity

It’s becoming increasingly clear that buyer demand is growing, and that continued sales activity growth is poised to start driving price appreciation by the end of 2013. Sales activity was strong, rising throughout the region and in virtu-ally every individual county. The 2,908 sales in the fourth quarter were up 19.3% from the fourth quarter of 2011, 18.7% from the fourth quarter of 2010, and 22.3% from the fourth quarter of 2008. All told, those 2,908 sales were only topped in recent years by the 3,202 sales in the fourth quarter of 2009, which was fueled by the incentives created by the home buyer tax credit.

Even more significantly, the fourth quarter capped a full year of strong transactional growth. The 11,287 regional single-family home sales total for 2012 was up 12.6% from the 2011 year, and represented the highest yearly total of sales since the end of the seller’s market in 2007. Sales activity is still well below what we saw at the height of the seller’s market in the mid-2000s, when the region was routinely clos-ing over 17,000 single-family homes every year, but sales bounced around the 10,000-unit level for the 2008-2011 years before finally hitting the 11,000 mark this year. And the momentum seems to be picking up, with the last six months of 2012 closing 16.1% more homes than the last half of 2011, after the first six months of 2012 was only up 8.3% over the first half of 2011.

The surge in sales activity is not yet having its expected impact in driving up prices, but we are seeing signs of potential appreciation for the near future. For the year, the regional average sales price of $491,874 was down 1.9% from 2011, but that number obscures how the market picked up momentum toward the end of the year. The aver-age sales price for the fourth quarter was $472,927 for the region, which

represented a 12.2% increase off the average sales price from the fourth quarter of 2011. And the rolling year average sales price, which measures the price at the end of every quarter for the prior 12 months, was up 2.2% from the third quarter, indicating that the pricing was accelerating as the year went on.

Indeed, we saw fourth-quarter price appreciation in many of the individual counties in the survey, particularly the higher-priced areas. The average sales price was up in the fourth quarter compared to last year in Westchester, Putnam, Rockland, all Dutchess – all counties with an average sales price above $300,000. But prices were down in Orange, Sullivan, and Ulster, the three counties in the sur-vey where the average sales price was below the $300,000 level. Why the discrepancy? It might be that demand is simply stronger in the higher-priced markets, and will gradually filter down into other areas. Or the cause might be the lingering effects of the 2009-10 home buyer tax credit, which artificially stimulated demand in the lower-end markets and might have bolstered prices at a level that could not be sustained over time.

Going forward, we believe that the market is poised to start a new market cycle in the next year. Housing market cycles in our area have tended to run in 15-year rhythms. For example, the cycle that began in 1981 and peaked in 1988 ended in about 1996. Similarly, we believe the market cycle that began in 1997 and peaked in 2005 has now run its course at the end of 2012. Buyer demand has now increased over the past year or two, and prices have largely started to stabilize throughout the region. If the market follows the traditional cycle, we will be entering a seller’s market within the next year, marked by increasing buyer demand, rising sales figures, and ultimately some price appreciation. We do not project any substantial pricing changes in 2013, but we believe that by the end of the year prices will be above their current levels. All told, we project that the market is changing, and that we are poised to enter a seller’s market in the next year. This might seem optimistic, but it’s worth remembering that the market peaked almost seven years ago, and that we have been struggling through the aftermath of the 2008 market correction for over four years. The time seems to have come for the market to finally turn around, particularly given that prices are now down to 2003-04 levels, interest rates are at historic lows in the sub-4% area, and the overall economy seems to be improving.

Regional Market Overview

Regional Rolling Year Average Sales Prices and Number of Homes Sold

Average Sales Price

Number of Homes Sold

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q4

200,000

245,000

290,000

335,000

380,000

425,000

470,000

515,000

560,000

605,000

650,000

4,000

5,600

7,200

8,800

10,400

12,000

13,600

15,200

16,800

18,400

20,000

Regional Rolling Year Average Sales Prices and Number of Homes Sold

Average Sales Price

Number of Homes Sold

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q4

200,000

245,000

290,000

335,000

380,000

425,000

470,000

515,000

560,000

605,000

650,000

4,000

5,600

7,200

8,800

10,400

12,000

13,600

15,200

16,800

18,400

20,000

www.randrealty.com

WESTCHESTER | PUTNAM | DUTCHESS | ROCKLAND | ORANGE |

Market ReportReal Estate

4Th QuArTEr | 2012

The housing market in Westchester and the Hudson Valley finished strongly in the fourth quarter of 2012, with both sales up throughout the region and prices overall rising from 2011 levels.

©2012 Independently Owned and Operated By The Rand Family.

Buyer Features• Advanced home search• Check-box searching• Saved home searches• Open House Listings• New Home Sites• Virtual Tours• Google Maps• School reports

Resources• Community Profiles• Market Intelligence Blog• “Make it Your Own” Makeover Articles• OwnAmerica Investing Resources• BHG Lifestyle Video Library • Home Valuator

RandRealty.com Stats • 1.7M Yearly Visitors• 6.1M Yearly Searches• 12.2M Yearly Page Views• Over 7,000 Yearly Online Inquiries

Our fully-featured website is the centerpiece of our

service platform for buyers. Unlike national sites

like Trulia and Zillow, and many local broker sites, we

have ALL the details on ALL the listings, along with a

whole range of resources that buyers need.

Lead Generation Systems

Realtor for Life Mailing ProgramThe Realtor-for-Life program is our innovative solution to sphere of influence marketing – eight great mailings a year, consisting of four quarterly market reports and four seasonal event guides. All proprietary and local content designed to enhance your relationship with your sphere. And

if you get the full program, we give you all the inserts, the stamps, and the envelopes, and a model letter that you can print with letterhead right off Contact Manager.

CORE is not just about client service or client conversion, it’s also about client generation. Our philosophy of “Service-Oriented Lead Development (SOLD)” is designed to help you build your business by expanding your conception of the services you can provide to potential prospects. No cold calling, no manipulation, and a flexible approach that allows you to generate leads at your own comfort level. Here are just some of the great tools you should be taking advantage of:

Realtor for Life Email ProgramAlong with the R4L mailing program, you can send unlimited branded email versions of the quarterly market reports and event guides. With eight emails a year, you have one of the best client email blast programs you could ever ask for, basically for free.

FSBO Courtesy MailingTo help give you a purpose in reaching out to FSBO sellers, we have the FSBO Courtesy Mailing, which actually addresses sellers’ needs by giving them advice about selling their home on their own – along with an explanation as to why they shouldn’t. A great way to get your foot in the door.

Expired Courtesy MailingFor expired sellers, we have a courtesy mailing that address THEIR needs – i.e., why didn’t their home sell. Along with an explanation as to the three reasons why listings don’t sell, we have a self-diagnostic where expired sellers can evaluate the marketing and service they received from their last broker. Again, a great way to

open up a relationship with a potential client.

Marketing MaterialsIf you want high-quality marketing materials, we’ve got everything you need. Property Flyers. Event Guide. Market Reports. Simple CMAs. They all make great mailers or marketing materials for your open houses.

XPressDocs For your direct mail needs, we have a partnership with XPressDocs, with dozens of high quality designs for your just listed, just sold, open house, or other mailings.

PinpointA Better Homes and Gardens Exclusive, the Pinpoint direct mail program allows you to demographically target potential clients with a direct mail solicitation.

Randcenter TechnologyAnd, of course, we have all the Randcenter tools that you can use for lead generation, such as Contact Manager, Cross Search, or Simple CMA on Presentation Center.

Enchanting Montebello Retreat

Advertising Supplement to The Wall Street Journal

Westchester, & Putnam County Events

March 3, 8:30 AM-12 PM, Yorktown HeightsBreakfast with Sponge Bob and Friends at the Yorktown Elks Lodge. 590 Waverly Road. Sponsored by the Yorktown Lions. For more info, call Denise D’Amico (914) 962 5876.

March 6, 6:30 PM, New RochelleThe Metropolitan Opera: Rigoletto Encore, 33 LeCount Place, New Rochelle. Director Michael Mayer has placed his new production of Verdi’s towering tragedy in Las Vegas in 1960. Piotr Beczala is the womanizing Duke of Mantua, Željko Lucic is his tragic sidekick, Rigoletto, and Diana Damrau is Rigoletto’s daughter, Gilda. Admission: Varies. FathomEvents.com

March 9, 12 PM, White PlainsCome join the “Wearing of the Green” and 27 marching bands, pipers, floats, Irish Step Dancers, Twirlers, drill teams and community groups for the 16th Annual White Plains St. Patrick’s Day Parade. Mamaroneck Avenue to Main Street . Free. www.wpbid.com

March 9 & 10, White PlainsJournal News Golf Show – latest equipment, apparel and accessories, work with area pros to fine tune your game. Westchester County Center - 198 Central Avenue, $10 Adults. www.countycenter.biz

March 10, 10 AM-3 PM, White PlainsIndoor Farmers Market at the Westchester County Center – Fresh produce, baked goods, cheese, maple syrup, honey, jam, meat, soaps and dairy products, free admission, parking $5, (914) 995-4050, www.countycenter.biz

March 10, 4 PM, LarchmontA reading by Sara Mansfield Taber, author of Born Under an Assumed Name, about growing up as the daughter of a covert spy. All are welcome and refreshments will be served at 3:30 PM. Free admission. Village Center (behind the Larchmont Library). (914) 834-2281. www.larchmontlibrary.org

March 10, 6–9 PM, Mount VernonPJS Jazz Society presents: Live Jazz Concert with Laura Mann. Location: First Presbyterian Church, 199 North Columbus Avenue at Lincoln Avenue. Cost: $20. www.pjsjazz.org

March 15, 11 AM–3 PM, New RochelleSt. Patrick’s Day Luncheon at the Hugh A. Doyle Senior Center, 94 Davis Avenue. Suggested donation $2. For more info, call (914) 235-2363.

March 16, 1-5 PM, White PlainsEnjoy an afternoon of family fun for children ages 3-11. Play miniature golf all over the library. White Plains Library. Free. www.whiteplainslibrary.org

March 19, Yorktown HeightsLions Club breakfast with the Easter Bunny. Join the celebration at the Elks Lodge located on Route 202. For more info, call (914) 245-4599.

March 23, 10:30 AM & 12 PM, Mt. PleasantSpring Egg Hunt at Broadway field in Hawthorne. Pre-schoolers - 2nd graders. Bring a basket. A visit from the Easter Bunny! Escorts will bring your children on to the field to gather eggs. All adults will wait on the basketball courts. In case of inclement weather please call the Recreation Hotline at 914-742-2364 for updates on times and location. Free. www.mtpleasantny.com

March 23, 10-4 PM, YorktownEaster Egg Hunt at Downing Park and Breakfast with the Easter Bunny. For more info, call Denise (914) 962-5876.

March 23, 1 PM, Yonkers.2nd Annual McLean Avenue St. Patrick’s Day Parade. Free admission. Free parking and Shuttle Bus Service compliments of Empire Casino – park in Yonkers Avenue Lot at the Casino! https://www.facebook.com/#!/pages/McLean-Avenue-St-Patricks-Day-Parade/317599634948106?group_id=0

March 26, 11 AM, LarchmontSilly Sally Bubbles Show. For all ages – Come one; come all to this silly interactive show where the performer uses multiple wands to create fantastic bubbles! Some are big enough to fit inside of! Silly Sally will provide lots of silly family fun! Registration is not required but seating is on a first come, first serve basis. Free admission. Village Center (behind the Larchmont Library). (914) 834-2281. www.larchmontlibrary.org

March 28, 3 PM, LarchmontFrogs, Bugs and Animals with Jason from Green Meadows Farm. For all ages – Come meet a tree frog, a hedgehog, lots of bugs, and fuzzy bunnies. This fun show will help your child gain an understanding of many different creatures! Registration is not required, but seating is on a first come, first served basis. Free admission. Village Center (behind the Larchmont Library). (914) 834-2281. www.larchmontlibrary.org

March 30, 10-11:30 AM, YonkersEaster Egg Hunt at Redmond Field on Cook Avenue, rain or shine! Come see the Easter Bunny and hunt for Easter eggs. Free. Children 4 and under at 10:00 am. 5-7 years at 10:30 am. 8-10 years at 11 am. www.cityofyonkers.com

www.randrealty.com

Agent Name HereLicensed Real Estate Salesperson

(999) 999-9999 ext. xxx

[email protected]

We respect your decision to try to sell on your own, because we understand that at times like this people are trying to save money wherever possible. If you believe that you can sell your home for the same price as a broker, and you think you can handle the work that it takes, then you should certainly consider selling your home yourself.

But we don’t believe that you will save money selling on your own. We hon-estly and fi rmly believe that homeowners are better off taking advantage of the services we provide, that they net more money in their pocket by tak-ing advantage of the broker-supported real estate market Now, of course,

we have a bias here, because we are in the business of helping people buy and sell homes. But if we didn’t believe that we actually perform a valuable service that sellers need, then we wouldn’t be in the business. Moreover, if our services weren’t valuable, then why would virtually all the sellers in our area list with a broker, rather than sell on their own? It’s not because they don’t care about money. It’s because they see the value in what real estate brokers do.

Here are a few reasons why you probably should consider listing your home with a broker.

And Seven Reasons Why You Probably Shouldn’t.

1. Basic economics says that bro-kers will get you a higher price.If you’re trying to get the best price for an item, you need to expose it to the largest potential pool of buyers. That large pool of buyers can then bid against themselves to drive the price up to the highest level pos-sible. If you list with an MLS broker, you create the largest possible demand for your home by putting your home into the open real estate market, with hundreds of bro-kers and thousands of agents working to sell your home to an enormous pool of buy-ers. Basic economic theory says that the larger the potential buyer market, the high-er the price. But if you don’t take part in that broker-generated market, you’re not going to get that broker-generated price. You’re the only one working to sell your home.

2. You don’t get the internet exposure.If you’re trying to sell your home in the internet age, you need maximum in-ternet exposure. When you list your home with a broker like Better Homes and Gardens Rand Realty, we list your home on our website randrealty.com, which gets thousands of unique users every day. On top of that, we also list your home cooperatively with all the other real estate broker web-sites in the region, including our competitors. So any buyer looking on any conceivable real estate website is going to fi nd your home. Yes, you can list on some sites that take FSBO listings, but not on the local broker websites, which is where most buyers look.

3. Who are your buyers going to be? Bargain-hunters.If you’re selling on your own, you’re really marketing to a small segment of the buyer population that has chosen to work without a broker. Why would people work without a broker, who will do all the leg work for them, particularly when most buyers perceive that the seller pays the broker any-way? The answer is that buyers who work without a broker are looking for bargains. They’re looking for bargains. They think that people who sell on their own are likely to be more negotiable, less likely to price well to the market, and more desperate. So your buyers tend to be bottom-feeders, looking for the best deal they can get. That doesn’t put more money in your pocket, it puts money in their pocket.

4. “Well, you’re not paying a broker, so…”Even if your bargain-hunting buyers make an offer, they’re likely to use your FSBO status against you in lowballing you. Most offers will come with this qualifi er: “well, you’re not paying a broker’s fee, so this offer is almost what you’d get if you sold with a broker.” In other words, buyers will always deduct the perceive commission from their offers, justifying it because you’re not paying a broker. So you end up saving them money, not you.

5. Do you really have the time for it?What’s your time worth? Selling a home is a big job, and takes a lot of time. That’s why most peo-ple hire professionals to take all the steps to sell a home: taking pictures, putting up signs, putting in ads, staging and detailing the home, placing listings in internet sites, writing descriptions, ar-ranging showings, attending showings, getting feedback, holding open houses, and keeping track of the market. And that’s before the entire offer and acceptance stage, which requires even more work. Yes, you can do that work yourself, but how much is your time worth? If it takes you 30-40 hours of work to do the agent’s job for her, in order to try save a few thousand dollars, was it worth it to you?

6. Our marketing is more powerful than FSBO marketing.Our marketing is more powerful than FSBO marketing People who sell on their own see only the superfi cial aspects of what an agent does, and think that they can do those same things. They can put up a sign. They can put an ad in the paper. Why should they pay an agent thousands of dollars to do it for them? That’s understandable, if that was in fact all that an agent did. But our sign is different from a FSBO sign, and our ad is different from a FSBO ad. When someone calls on our sign or ad, and fi nds that the home they called on isn’t right for them, our agent handling the call transitions them to other comparable homes that might meet their needs – like yours. If someone calls a FSBO ad or sign, and the home isn’t right for them, the seller is not about to transition them to being interested in other homes. When you’re part of the broker-generated market, you get the value of that market.

7. You’re not really paying the commission.Why do people think that the seller pays the commission? At the closing table, all the money comes from the buyer, not the seller. Yes, the seller is the one who actually writes the check for the broker’s fee, but it’s the buy-er who provides that money to the seller. Really, it’s the buyer who pays the commission, by paying more for the home than she probably would for a FSBO sold without a broker. Finally, if you are in a short sale situation, your bank pays the commission. People think that that if they are underwater on their mortgage, they need to sell on their own to save as much money as possible. That’s exactly backwards. In those situations, you absolutely need a professional, trained real estate agent to handle your sale with the bank. The bank will pay the commission, not you. And your agent can help make sure that your bank will take the short sale, helping you through the process.

Why Did Your Listing Expire?If your listing recently expired, you’re not alone. Lots of sellers experience diffi culty selling their homes within the initial listing period -- over 40% of the listings taken last year expired without selling. Many of those homes were ultimately relisted, and successfully got into contract. So your home’s failure to sell within the initial listing period does not mean that your home can’t sell, or that there’s something wrong with it.

Nevertheless, you’re probably curious as to why your home didn’t sell within the initial listing period. You’re prob-ably also curious what you and your broker could do differently the next time to have a better chance of attracting acceptable offers. If so, you might fi nd the following tips helpful when you relist your property for sale:

#1 MarketingAccording to national studies, most buyers use the internet to start their home searches. Indeed, most buyers get their fi rst impression of your home by what they see online. So with all the listings on the market today, your home has to stand out in that online marketplace.

The PicturesStudies show that pictures are the most effective marketing tool for at-tracting attention from buyers. People like looking at pictures, so the more pictures you have, the better. You should include pictures of every room, with both interior and exterior shots, and show off all the best features of your home. Pictures should be taken with a wide-angle perspective, which makes rooms look bigger, and should be taken in the highest-resolution possible. Most importantly, the pictures should be refreshed periodically, which can sometimes attract buyers to take another look by making the listing seem fresh and new.

The DescriptionToo many brokers and sellers still write property descriptions as if they are writing a newspaper ad, with abbreviations and superfi cial generalities that do not provide an engaging depiction of your home. The MLS allows for a much longer description than most brokers use, and many internet sites allow for even longer descriptions. So you and your broker should take the time to create an interesting, attractive, and thorough description of the highlights of your home, not a terse three-line property ad that is appropri-ate for the classifi ed section.

Internet SyndicationYour buyer could be anywhere in the world, so you need to have your home marketed on every signifi cant internet site that attracts buyers. If you list your home with most MLS brokers, your listing will be syndicated to many of the broker websites in the area. But you also need to be syndicated through all the national real estate sites like realtor.com, zillow.com, and trulia.com,among others, because people from outside the area often use those sites for their initial searches. And you also need to be on news sites like nytimes.com, which attract a large volume of regional buyers. So when you relist your property, you need to make sure that your home is syndi-cated as widely as possible, to capture the largest possible pool of buyers.

#2 ConditionIf you want your home to stand out in the marketplace, you have to prepare

it for sale. Most sellers on the market fail to properly “detail” and “stage”

their home for maximum appeal to buyers. Although it can take a little

time, and maybe a little money, the effort will pay off in a faster sale.

That means presenting it to buyers as if it is a model home at a builder

site: thoroughly cleaned, free of clutter, and de-personalized so prospec-

tive buyers can envision themselves living in it. Unfortunately, when you

try to sell your home, you have to give up some of the comfort of living

in that home. That means eliminating some of the personal items in the

house, clearing out the clutter that collects in your closets, cabinets, and

countertops, and making the home look spacious and open.

# 3 PricingFinally, if a home does not sell within its initial term, sellers should review

their pricing strategy. The initial asking price of the property might have

been too high for the market, perhaps suggested by a broker who tried to

“win the listing” by telling the seller what she wanted to hear. Or perhaps

the initial price was set fairly for the prevailing market conditions, but those

conditions quickly changed and the broker never reassessed the situation.

A seller’s pricing strategy has to be responsive to changes in the market

and feedback from buyers.

First, sellers need to keep track of market conditions, watching as other

properties sell or come on the market – have recent sales below the sell-

er’s price point undermined the current pricing strategy?

Second, sellers should pay careful attention to the feedback they get from

prospective buyers and other brokers, who can help them identify fl aws

in the pricing strategy or ideas to make the home more appealing at the

current price point.

Finally, sellers should carefully monitor their “property traffi c” rate online –

the number of times buyers click through to see their home when it comes

up on searches – because that can indicate whether the online marketing

is attracting buyers in that price range.

Your 2013 Makeover To Do List

Establishing Your Online Profile

o I have built my RandRealty.com profile and web page.

o I have a profile on BHGRealEstate.com.

o I have a profile page on Google+

o I have a personal profile on Yelp.com.

o I have a business profile on Yelp.com

o I have a professional profile on Trulia.

o I have a professional profile on Zillow.

o I have a professional profile on Linkedin.

o I have a personal profile on Facebook.

o I have a Facebook business page.

o I have joined Twitter and followed real estate news sources.

Using Essential Technology Tools of the Trade

o I have a smartphone.

o I can create a mobile hotspot on my smartphone.

o I have a computer (either desktop or laptop).

o I have a tablet computer.

o I have a recent-model camera with a wide-angle lens.

o I have an online calendar like Google Calendar.

o I have Picasa Desktop (or a similar program) to manage pictures.

o I can store my photos on Picasa Web Albums (or a similar program).

o I have the Dropbox service to store and share big files.

o I have the Evernote app to take notes.

o I know how to use Google maps.

o I have a reminder app like Orchestra.

o I have set up the branded app for collaboration on Realtor.com.

o I know how to use the Open Home Pro App.

o I know how to use the Magic Plan App.

o I know how to use the Videolicious App.

o I know how to create portfolio photo books on MyPublisher.com.

RandCenter Technology Systems

o I know how to create a full CMA on Presentation Center.

o I know how to create a Simple CMA on Presentation Center.

o I know how to create a Buyer Tour on Presentation Center.

o I know how to create a FSBO Courtesy Package on Presentation Center.

o I know how to create an Expired Courtesy Package on Presentation Center.

o I know how to create the Seller Orientation Guide on Presentation Center.

o I know how to create the Buyer Orientation Guide on Presentation Center.

o I have created an agent resume in the Orientation Guides.

o I know how to create property flyers on Presentation Center.

o I know how to do the enhanced description on Enhancement Center.

o I know how to bulk upload high-resolution photos on Enhancement Center.

o I know how to send a direct mailing piece through XPressDocs.

o I know how to send targeted direct mail on Pinpoint on the Greenhouse.

o I know how to create the R4L Market Report and Event Guide email links.

o I know how to use Leadrouter.

o I know how to send mail merge letters on Contact Manager.

o I know how to use Client Connect (a/k/a, Agent Intuition).

For those of you who went through the Market is Changing and Makeover classes,

here is a “to do” list of items that you should be able to check off to be full prepared

for the coming market changes.

We covered a lot here in this Report, so we thought it would be helpful to itemize some “to do” list items for agents who want to

be able to thrive in the new market environment. So here are ten basic things you can to do help adapt to the new market realities that are coming soon.

Ten Ways to Adapt to Market Change

1. Enhance your marketing on every listing you take. It’s no longer just a matter of trying to sell that listing, but trying to get the next one. Better pictures, better descriptions, video, portfolios – use the tools that we have to do a better job marketing your listings.

2. Build your online reputation. Clients are going to be more selective in looking for agents, so make sure your well-developed profile links show up when someone googles you. Make sure you have a well-written personal profile, and that you’ve updated your profiles on RandRealty.com, BHGRealEstate.com, Facebook, Linkedin, Google, and anywhere else that people might look for you.

3. Educate your clients. Make sure your clients are fully-informed about the entire real estate process, including the potential pitfalls of multiple bid situations and faulty appraisals. Use the Orientation Guides to supplement and enhance the guidance you are always giving when meeting with clients.

4. Get buyer agreements signed. Not only will you forge a stronger relationship with your buyers, but you’ll protect your buyer-side commission from low-service brokers.

5. Establish your transactional process. You’re going to be handling more transactions soon, so set up a process to manage them more efficiently. This could be a simple as a personal “Project Plan” that governs all the steps you need to take to get a deal from offer to closing.

6. Master technology. You need a smartphone, and either a laptop or a tablet for presentations. It’s no longer acceptable to be anti-technology, not with a whole new generation of tech-savvy buyers coming of age.

7. Commit to lead generation. The rewards for lead generation are higher than they’ve been in years. Do the R4L program, work your “inactive leads” file, start a campaign to work Expireds or FSBOs. Do something to generate new leads for yourself, because leads are going to increasingly become deals.

8. Refine your listing presentation. Listings are going to be more competitive than ever, so you need an absolutely killer presentation. Learn how to build rapport through a proper consultation, how to collaboratively build the pricing presentation, and master the value package that we have so that you never lose a listing to the competition.

9. Build a buyer presentation. The most neglected part of our business is the buyer presentation, which few agents ever develop. Build one. Buyer retention is going to be crucial in the new market.

10. Invest in your business. Now is the time to invest in your business, because the potential return on that investment is going to be greater in a rising market. Invest money: buy the tools you need to compete in the new market. Invest time: take classes to master the new skills you will need.